Audit 17689

2022 ? 001 Epidemiology and Lab Capacity for Infectious Diseases AL# 93.323 Reporting Condition: One semiannual report was filed 27 days after the due date. In addition, two semiannual performance reports pertaining to Acute Flaccid Myelitis did not contain all of the required data elements of the award terms. Criteria: Grant awards terms are to be followed to remain in compliance with award provisions. The reports were not filed in accordance with the grant award terms. Cause: Health Department Personnel were unfamiliar with the reporting requirements of the grants. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 002 CDBG AL# 14.218 Program Income Condition: Federal grant provisions require that the County track program income and report it on the cash on hand reports. During testing it was noted that not all program income was being captured in the County?s General Ledger and being reported on the cash on hand reports. Several loan programs overseen by Allegheny County Economic Development (ACED) are administered through Component Units, but are still included in the calculation for program income. These amounts are not included in the general ledger or reported on the cash on hand reports. Criteria: CDBG grant recipients are required to treat principal and interest repayments on CDBG program funded loans as program income. CDBG grant recipients should use the same modi?ed accrual basis of accounting to account for program income that they use to account for program expenditures. In addition, to the extent that CDBG-funded loans are not part of a revolving loan program, the related program income is to be used to ?nance CDBG program expenditures before additional entitlement funds are utilized. Cause: The department has experienced significant turnover in staff, and in addition loan reports are utilized which track income on a cash basis rather than modified accrual. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 003 CDBG AL# 14.218 Reporting Condition: There were numerous reconciliation errors and discrepancies during testing of the CDBG 3Q22 Cash on Hand Report. One of which was Federal Funds disbursements being overstated by $359,887.18 on the 3022 CDBG Cash on Hand on Report. This overstatement of expenditures was due to two expenditures for a total of $334,835.32 being reversed and then resubmitted without ACED including the two reversals in the calculation of total Federal disbursements. ACED also included $25,051.86 of program income disbursements in their calculation of disbursements of Federal Funds in the 3Q22 CDBG Cash on Hand Report. Criteria: ACED should review reports for accuracy before submitting them to HUD. Federal Disbursements reported on the Cash on Hand Report should be reconcilable to the disbursements recorded in the County?s JDE accounting system. Cause: There was not an adequate level of review in the reporting process. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 004 CDBG AL# 14.218 Reporting Condition: During testing we noted that ACED failed to include three (3) expenditures totaling $66,162.43 on the CDBG-CV 2021 PR26 report. Auditor discovered this error using the PRO7 report for program year 2021 (July 2021 through June 2022). Criteria: ACED should review reports for accuracy before submitting them to HUD. Expenditures reported on the PR26 report should be reconcilable to the expenditures recorded in the PR07 report. Cause: There was not an adequate level of review in the reporting process as well as confusion as to what constituted an expenditure in the program year versus the fiscal year. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 005 CDBG AL# 14.218 Allowable Costs Condition: During testing it was noted that fringe benefits of employees who do not work full time on the CDBG program are billed to the program using a blended rate set by the budget office. This rate does not reflect actual time spent working on the program, and as such could misrepresent expenditures for the program. Criteria: ACED should charge fringe benefits to the program based on hours worked on the program, and not a blended rate. The use of a blended rate could result in ineligible costs being charged to the program. Cause: ACED has not established a procedure to cross-charge the actual amount of each employee?s fringe bene?ts, which are not related to work on the CDBG program, out of CDGB to the proper program. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: The amount of questioned costs, if any, were unable to be determined. Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 006 CDBG AL# 14.218 Allowable Costs Condition: During testing we obtained the time records for four periods in 2022 for which salaries, bene?ts, and other compensation-related costs were included in our randomly selected sample of CDBG expenditures recorded in 2022. For each of the four pay periods, those time records indicated that some ACED employees worked on the CDBG program 100% of the time while other employees only spent a portion of their time working on the CDBG program. Even though some ACED employees spent less than 100% of their time working on the CDBG program during those pay periods, the full compensation cost (salary and fringe bene?ts) of all ACED employees for those pay periods was allocated entirely to the CDBG program. For the ?rst and second quarter of 2022 (January ? June), a portion was cross-charged to the proper program, but not the full amount. Criteria: ACED should only charge payroll costs to the program for hours working on that program, and should allocate the other charges to the proper area for time spent on programs other than CDBG. Cause: ACED has a process of cross-charging out employees time spent on other programs, but due to significant turnover in the department these cross-charges were not done in a timely manner. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: $240,732. Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 007 Continuum of Care AL# 14.267 Matching Condition: During testing it was noted one of three randomly selected program providers, which was engaged in real property leasing as opposed to the provision of rental assistance, claimed portions of rents that it paid, which exceeded the fair market rents as determined by HUD, as matching expenditures. The County Department of Human Services (DHS) did not disallow those costs, it improperly included those costs, $57,763 in the aggregate, in the amount it reported to HUD as matching expenditures. Criteria: Cash match must be used for the cost of activities that are identi?ed as eligible program expenditures in the federal regulations. Rents that exceed the fair market rents as determined by HUD are not allowable program expenditures. Grantees should also have a process in place to verify the amounts claimed and reported as matching expenditures. Cause: DHS does not have appropriate processes and internal controls in place to facilitate compliance with the matching requirements. Suf?cient reviews of the amounts claimed and reported as matching expenditures are not occurring. DHS personnel also advised us that they were unaware that any rents that exceeded the fair market rents as determined by HUD cannot be used as matching expenditures. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: $57,763. Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 001 Epidemiology and Lab Capacity for Infectious Diseases AL# 93.323 Reporting Condition: One semiannual report was filed 27 days after the due date. In addition, two semiannual performance reports pertaining to Acute Flaccid Myelitis did not contain all of the required data elements of the award terms. Criteria: Grant awards terms are to be followed to remain in compliance with award provisions. The reports were not filed in accordance with the grant award terms. Cause: Health Department Personnel were unfamiliar with the reporting requirements of the grants. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 002 CDBG AL# 14.218 Program Income Condition: Federal grant provisions require that the County track program income and report it on the cash on hand reports. During testing it was noted that not all program income was being captured in the County?s General Ledger and being reported on the cash on hand reports. Several loan programs overseen by Allegheny County Economic Development (ACED) are administered through Component Units, but are still included in the calculation for program income. These amounts are not included in the general ledger or reported on the cash on hand reports. Criteria: CDBG grant recipients are required to treat principal and interest repayments on CDBG program funded loans as program income. CDBG grant recipients should use the same modi?ed accrual basis of accounting to account for program income that they use to account for program expenditures. In addition, to the extent that CDBG-funded loans are not part of a revolving loan program, the related program income is to be used to ?nance CDBG program expenditures before additional entitlement funds are utilized. Cause: The department has experienced significant turnover in staff, and in addition loan reports are utilized which track income on a cash basis rather than modified accrual. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 003 CDBG AL# 14.218 Reporting Condition: There were numerous reconciliation errors and discrepancies during testing of the CDBG 3Q22 Cash on Hand Report. One of which was Federal Funds disbursements being overstated by $359,887.18 on the 3022 CDBG Cash on Hand on Report. This overstatement of expenditures was due to two expenditures for a total of $334,835.32 being reversed and then resubmitted without ACED including the two reversals in the calculation of total Federal disbursements. ACED also included $25,051.86 of program income disbursements in their calculation of disbursements of Federal Funds in the 3Q22 CDBG Cash on Hand Report. Criteria: ACED should review reports for accuracy before submitting them to HUD. Federal Disbursements reported on the Cash on Hand Report should be reconcilable to the disbursements recorded in the County?s JDE accounting system. Cause: There was not an adequate level of review in the reporting process. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 004 CDBG AL# 14.218 Reporting Condition: During testing we noted that ACED failed to include three (3) expenditures totaling $66,162.43 on the CDBG-CV 2021 PR26 report. Auditor discovered this error using the PRO7 report for program year 2021 (July 2021 through June 2022). Criteria: ACED should review reports for accuracy before submitting them to HUD. Expenditures reported on the PR26 report should be reconcilable to the expenditures recorded in the PR07 report. Cause: There was not an adequate level of review in the reporting process as well as confusion as to what constituted an expenditure in the program year versus the fiscal year. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: none Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 005 CDBG AL# 14.218 Allowable Costs Condition: During testing it was noted that fringe benefits of employees who do not work full time on the CDBG program are billed to the program using a blended rate set by the budget office. This rate does not reflect actual time spent working on the program, and as such could misrepresent expenditures for the program. Criteria: ACED should charge fringe benefits to the program based on hours worked on the program, and not a blended rate. The use of a blended rate could result in ineligible costs being charged to the program. Cause: ACED has not established a procedure to cross-charge the actual amount of each employee?s fringe bene?ts, which are not related to work on the CDBG program, out of CDGB to the proper program. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: The amount of questioned costs, if any, were unable to be determined. Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 006 CDBG AL# 14.218 Allowable Costs Condition: During testing we obtained the time records for four periods in 2022 for which salaries, bene?ts, and other compensation-related costs were included in our randomly selected sample of CDBG expenditures recorded in 2022. For each of the four pay periods, those time records indicated that some ACED employees worked on the CDBG program 100% of the time while other employees only spent a portion of their time working on the CDBG program. Even though some ACED employees spent less than 100% of their time working on the CDBG program during those pay periods, the full compensation cost (salary and fringe bene?ts) of all ACED employees for those pay periods was allocated entirely to the CDBG program. For the ?rst and second quarter of 2022 (January ? June), a portion was cross-charged to the proper program, but not the full amount. Criteria: ACED should only charge payroll costs to the program for hours working on that program, and should allocate the other charges to the proper area for time spent on programs other than CDBG. Cause: ACED has a process of cross-charging out employees time spent on other programs, but due to significant turnover in the department these cross-charges were not done in a timely manner. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: $240,732. Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.

2022 ? 007 Continuum of Care AL# 14.267 Matching Condition: During testing it was noted one of three randomly selected program providers, which was engaged in real property leasing as opposed to the provision of rental assistance, claimed portions of rents that it paid, which exceeded the fair market rents as determined by HUD, as matching expenditures. The County Department of Human Services (DHS) did not disallow those costs, it improperly included those costs, $57,763 in the aggregate, in the amount it reported to HUD as matching expenditures. Criteria: Cash match must be used for the cost of activities that are identi?ed as eligible program expenditures in the federal regulations. Rents that exceed the fair market rents as determined by HUD are not allowable program expenditures. Grantees should also have a process in place to verify the amounts claimed and reported as matching expenditures. Cause: DHS does not have appropriate processes and internal controls in place to facilitate compliance with the matching requirements. Suf?cient reviews of the amounts claimed and reported as matching expenditures are not occurring. DHS personnel also advised us that they were unaware that any rents that exceeded the fair market rents as determined by HUD cannot be used as matching expenditures. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: $57,763. Recommendation: The County should ensure all compliance requirements are followed for federal grants awarded. Management Response: Management agrees with the finding, see attached Corrective Action Plan.