Finding #SA2021-002: Support for Payroll Costs Charged to Grant
Assistance Listing Number: 20.507
Assistance Listing Title: Federal Transit – Formula Grants (Urbanized Area Formula Program)
Name of Federal Agency: Department of Transportation - Federal Transportation Administration
Federal Award Identification Number: CA-2021-009-01, CA-2020-005-01, CA-2020-005-02
Criteria: 2 CFR Part 200.430(i), “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” requires that grantees adhere to the following, “Payroll systems must be based on records that accurately reflect the work performed” and “be supported by a system of internal controls that provides reasonable assurances that charges are accurate, allowable, and properly allocated...” The payroll records must be a part of the official record, reflect the employee’s total activity and show if the specific activity of the person is being paid by more than one federal award.
Section 200.430(i)(viii) indicates that budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed, among other requirements.
Condition: We noted that the payroll costs for one employee were charged to the program based on a flat rate of 25% of the payroll costs, rather than based on the actual hours worked. Payroll costs, including salary and benefits, charged to the program during fiscal year 2021 totaled $8,997.
Questioned Costs: We question costs of $8,997, which consists of the payroll and fringe benefits charged to the grant for the employee based on the flat percentage of pay and benefits for the full fiscal year.
Effect: The City is not in compliance with the payroll documentation requirements set forth in 2 CFR Part 200.430(i).
Cause: We understand that grant program staff were not aware of the payroll documentation requirement and due to staff turnover, Finance staff cannot determine whether any such documentation exists.
Identification as a repeat finding: Yes, since 2019
Recommendation: The City should establish procedures to ensure that payroll costs charged to the program are documented in accordance with 2 CFR Part 200.430 for the Federal Transit-Formula Grants program and all federal grant programs.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-003: Pro-Rating Annual Payroll Costs Charged to Grant
Assistance Listing Number: 21.019
Assistance Listing Title: COVID-19 - Coronavirus Relief Fund
Name of Federal Agency: Department of Treasury
Pass Through Entity: California Department of Finance
Federal Award Identification Number: 390
Criteria: 2 CFR Part 200.430(i), “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” requires that grantees adhere to the following, “Payroll systems must be based on records that accurately reflect the work performed” and “be supported by a system of internal controls that provides reasonable assurances that charges are accurate, allowable, and properly allocated...” The payroll records must be a part of the official record, reflect the employee’s total activity and show if the specific activity of the person is being paid by more than one federal award.
Condition: The City charged a portion of three months of police and fire salaries to the Coronavirus Relief Fund program, and we noted one employee’s pay during that time included an annual stipend of $12,333, of which 33% was charged to the federal award, or $4,070. Although the pay was related to the employee’s gross pay under the applicable memorandum of understanding for the period, since it was an annual amount paid during the time charged to the grant, it should have been pro-rated to charge only 25% of the stipend to the federal award. Therefore, only 33% of that 25%, or $1,017 should have been charged to the federal award.
After the issue was discovered, we reviewed the other payroll charges for amounts that did not appear to be in line with regular salaries and noted the payroll charges included annual stipends for three employees totaling $35,905 of which 67% was charged to the federal award, or $24,061. Those amounts should have been prorated as noted above, therefore only 67% of 25%, or $6,015 should have been charged to the federal award. And, one employee’s vacation buy back, compensatory time off buy back, furlough used and administrative leave pay totaling $50,679 was charged to the grant, which does not appear to be related to the three-month period of salaries charged to the grant.
Questioned Costs: We question costs in the amounts of $3,053, $18,046 and $50,679, for total questioned costs of $68,724.
Effect: The City is not in compliance with the payroll documentation requirements set forth in 2 CFR Part 200.430(i).
Cause: We understand that City staff compiled the report of eligible public safety payroll costs to be charged to the federal award and did not analyze to see if it included annual pay amounts that should be pro-rated for the time period of salaries charged.
Recommendation: The City should establish procedures to ensure that payroll costs charged to the program are pro-rated when the costs cover a time period that is longer than that covered by or being charged to the grant award, to ensure that costs are allocated equitably between federal and non-federal funding sources.
In addition, the City should work with the grantor to determine if other eligible public safety payroll costs are allowed to replace the ineligible costs, or if the questioned costs need to be returned to the grantor.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-004: Allowable Subrecipient and Contract Costs
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The costs reimbursed to subrecipients and paid to vendors should not only be allowable under the grant program, the amounts paid should be supported by a contract or subgrant agreement with the entity.
Condition: During our testing of program expenditures for compliance with grant limitations and allowability, we noted that the City had a contract with a subrecipient for the Student Success Program, which included the personnel costs for the program/client coordinator of the program that provides basic and human schooling needs for eligible low-income children enrolled in the program. However, the costs reimbursed under the subrecipient agreement during fiscal year 2021 of $3,892 were for the subrecipient’s rent costs and not for costs related to the Student Success Program.
We also noted one vendor payment for costs related to running the Manteca Shelter in the amount of $50,000 that was supported by the vendor’s detail of expenses incurred for the period that totaled to only $47,292, a difference of $2,708. The contract with the vendor for the services provided indicated that it “shall not exceed” $225,000, and the first payment was to be a flat amount of $40,000, but it also indicated the “full payment of each task will only be made at such time as each task is completed” and did not indicate whether the remaining payments were to be on the reimbursement basis or a flat amount. City staff was not able to provide documentation to support the payment of the contract in “installments” as noted in the vendor invoice.
Questioned Costs: We question the costs disbursed to the subrecipient for the fiscal year of $3,892 and we question the costs paid to the vendor in excess of the supporting documentation of $2,708.
Effect: The City is not in compliance with the allowable costs requirements of the grant program.
Cause: We understand that the City staff responsible for the grant reimbursements at the time are no longer with the City and current City staff could not determine if the original subrecipient agreement was amended to allow the change from personnel costs to rent and if the vendor contract payment had additional supporting documentation that totaled to the amount paid.
Recommendation: The City should develop procedures to ensure that subrecipient costs reimbursed are related to the costs in the approved subgrant agreement.
In addition, the City should work with the grantor to determine if the ineligible costs can be corrected on a future reimbursement request, or if the questioned costs need to be returned to the grantor.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-005: Cash Management
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The City should submit drawdown requests to San Joaquin County throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the County, unless specifically authorized by the grantor.
Condition: During our testing of grant expenditures and the associated drawdown requests, we noted the following:
• One program disbursement in May 2021 in the amount of $20,100 was not included on a reimbursement request until September 2021.
• One program disbursement in November 2020 in the amount of $14,063 was not included on a reimbursement request until August 2021.
• One disbursement on December 3, 2020 of $5,000 was included in an October 2020 reimbursement that was received on November 10, 2020.
• One disbursement on September 17, 2020 of $3,892 was included in a July 2020 reimbursement that was received on September 8, 2020.
• Three program disbursements totaling $123,693 under the CDBG-CV program were not included on a reimbursement request during fiscal year 2021 or subsequent.
Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the County. And, the City requested and received reimbursement nine to twenty-three days before making the associated payments to two of the vendors.
Cause: We understand that both the variety of program expenditures incurred during the fiscal year, administrated by different departmental staff and staff turnover led to the late preparation of reimbursements and/or failure to file reimbursement requests. City staff was unable to determine why certain program costs were included on reimbursement requests prior to making the associated vendor payments.
Recommendation: The City should develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. In addition, City staff should ensure that costs are incurred prior to including them on a reimbursement request.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-004: Allowable Subrecipient and Contract Costs
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The costs reimbursed to subrecipients and paid to vendors should not only be allowable under the grant program, the amounts paid should be supported by a contract or subgrant agreement with the entity.
Condition: During our testing of program expenditures for compliance with grant limitations and allowability, we noted that the City had a contract with a subrecipient for the Student Success Program, which included the personnel costs for the program/client coordinator of the program that provides basic and human schooling needs for eligible low-income children enrolled in the program. However, the costs reimbursed under the subrecipient agreement during fiscal year 2021 of $3,892 were for the subrecipient’s rent costs and not for costs related to the Student Success Program.
We also noted one vendor payment for costs related to running the Manteca Shelter in the amount of $50,000 that was supported by the vendor’s detail of expenses incurred for the period that totaled to only $47,292, a difference of $2,708. The contract with the vendor for the services provided indicated that it “shall not exceed” $225,000, and the first payment was to be a flat amount of $40,000, but it also indicated the “full payment of each task will only be made at such time as each task is completed” and did not indicate whether the remaining payments were to be on the reimbursement basis or a flat amount. City staff was not able to provide documentation to support the payment of the contract in “installments” as noted in the vendor invoice.
Questioned Costs: We question the costs disbursed to the subrecipient for the fiscal year of $3,892 and we question the costs paid to the vendor in excess of the supporting documentation of $2,708.
Effect: The City is not in compliance with the allowable costs requirements of the grant program.
Cause: We understand that the City staff responsible for the grant reimbursements at the time are no longer with the City and current City staff could not determine if the original subrecipient agreement was amended to allow the change from personnel costs to rent and if the vendor contract payment had additional supporting documentation that totaled to the amount paid.
Recommendation: The City should develop procedures to ensure that subrecipient costs reimbursed are related to the costs in the approved subgrant agreement.
In addition, the City should work with the grantor to determine if the ineligible costs can be corrected on a future reimbursement request, or if the questioned costs need to be returned to the grantor.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-005: Cash Management
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The City should submit drawdown requests to San Joaquin County throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the County, unless specifically authorized by the grantor.
Condition: During our testing of grant expenditures and the associated drawdown requests, we noted the following:
• One program disbursement in May 2021 in the amount of $20,100 was not included on a reimbursement request until September 2021.
• One program disbursement in November 2020 in the amount of $14,063 was not included on a reimbursement request until August 2021.
• One disbursement on December 3, 2020 of $5,000 was included in an October 2020 reimbursement that was received on November 10, 2020.
• One disbursement on September 17, 2020 of $3,892 was included in a July 2020 reimbursement that was received on September 8, 2020.
• Three program disbursements totaling $123,693 under the CDBG-CV program were not included on a reimbursement request during fiscal year 2021 or subsequent.
Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the County. And, the City requested and received reimbursement nine to twenty-three days before making the associated payments to two of the vendors.
Cause: We understand that both the variety of program expenditures incurred during the fiscal year, administrated by different departmental staff and staff turnover led to the late preparation of reimbursements and/or failure to file reimbursement requests. City staff was unable to determine why certain program costs were included on reimbursement requests prior to making the associated vendor payments.
Recommendation: The City should develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. In addition, City staff should ensure that costs are incurred prior to including them on a reimbursement request.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-002: Support for Payroll Costs Charged to Grant
Assistance Listing Number: 20.507
Assistance Listing Title: Federal Transit – Formula Grants (Urbanized Area Formula Program)
Name of Federal Agency: Department of Transportation - Federal Transportation Administration
Federal Award Identification Number: CA-2021-009-01, CA-2020-005-01, CA-2020-005-02
Criteria: 2 CFR Part 200.430(i), “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” requires that grantees adhere to the following, “Payroll systems must be based on records that accurately reflect the work performed” and “be supported by a system of internal controls that provides reasonable assurances that charges are accurate, allowable, and properly allocated...” The payroll records must be a part of the official record, reflect the employee’s total activity and show if the specific activity of the person is being paid by more than one federal award.
Section 200.430(i)(viii) indicates that budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed, among other requirements.
Condition: We noted that the payroll costs for one employee were charged to the program based on a flat rate of 25% of the payroll costs, rather than based on the actual hours worked. Payroll costs, including salary and benefits, charged to the program during fiscal year 2021 totaled $8,997.
Questioned Costs: We question costs of $8,997, which consists of the payroll and fringe benefits charged to the grant for the employee based on the flat percentage of pay and benefits for the full fiscal year.
Effect: The City is not in compliance with the payroll documentation requirements set forth in 2 CFR Part 200.430(i).
Cause: We understand that grant program staff were not aware of the payroll documentation requirement and due to staff turnover, Finance staff cannot determine whether any such documentation exists.
Identification as a repeat finding: Yes, since 2019
Recommendation: The City should establish procedures to ensure that payroll costs charged to the program are documented in accordance with 2 CFR Part 200.430 for the Federal Transit-Formula Grants program and all federal grant programs.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-003: Pro-Rating Annual Payroll Costs Charged to Grant
Assistance Listing Number: 21.019
Assistance Listing Title: COVID-19 - Coronavirus Relief Fund
Name of Federal Agency: Department of Treasury
Pass Through Entity: California Department of Finance
Federal Award Identification Number: 390
Criteria: 2 CFR Part 200.430(i), “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” requires that grantees adhere to the following, “Payroll systems must be based on records that accurately reflect the work performed” and “be supported by a system of internal controls that provides reasonable assurances that charges are accurate, allowable, and properly allocated...” The payroll records must be a part of the official record, reflect the employee’s total activity and show if the specific activity of the person is being paid by more than one federal award.
Condition: The City charged a portion of three months of police and fire salaries to the Coronavirus Relief Fund program, and we noted one employee’s pay during that time included an annual stipend of $12,333, of which 33% was charged to the federal award, or $4,070. Although the pay was related to the employee’s gross pay under the applicable memorandum of understanding for the period, since it was an annual amount paid during the time charged to the grant, it should have been pro-rated to charge only 25% of the stipend to the federal award. Therefore, only 33% of that 25%, or $1,017 should have been charged to the federal award.
After the issue was discovered, we reviewed the other payroll charges for amounts that did not appear to be in line with regular salaries and noted the payroll charges included annual stipends for three employees totaling $35,905 of which 67% was charged to the federal award, or $24,061. Those amounts should have been prorated as noted above, therefore only 67% of 25%, or $6,015 should have been charged to the federal award. And, one employee’s vacation buy back, compensatory time off buy back, furlough used and administrative leave pay totaling $50,679 was charged to the grant, which does not appear to be related to the three-month period of salaries charged to the grant.
Questioned Costs: We question costs in the amounts of $3,053, $18,046 and $50,679, for total questioned costs of $68,724.
Effect: The City is not in compliance with the payroll documentation requirements set forth in 2 CFR Part 200.430(i).
Cause: We understand that City staff compiled the report of eligible public safety payroll costs to be charged to the federal award and did not analyze to see if it included annual pay amounts that should be pro-rated for the time period of salaries charged.
Recommendation: The City should establish procedures to ensure that payroll costs charged to the program are pro-rated when the costs cover a time period that is longer than that covered by or being charged to the grant award, to ensure that costs are allocated equitably between federal and non-federal funding sources.
In addition, the City should work with the grantor to determine if other eligible public safety payroll costs are allowed to replace the ineligible costs, or if the questioned costs need to be returned to the grantor.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-004: Allowable Subrecipient and Contract Costs
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The costs reimbursed to subrecipients and paid to vendors should not only be allowable under the grant program, the amounts paid should be supported by a contract or subgrant agreement with the entity.
Condition: During our testing of program expenditures for compliance with grant limitations and allowability, we noted that the City had a contract with a subrecipient for the Student Success Program, which included the personnel costs for the program/client coordinator of the program that provides basic and human schooling needs for eligible low-income children enrolled in the program. However, the costs reimbursed under the subrecipient agreement during fiscal year 2021 of $3,892 were for the subrecipient’s rent costs and not for costs related to the Student Success Program.
We also noted one vendor payment for costs related to running the Manteca Shelter in the amount of $50,000 that was supported by the vendor’s detail of expenses incurred for the period that totaled to only $47,292, a difference of $2,708. The contract with the vendor for the services provided indicated that it “shall not exceed” $225,000, and the first payment was to be a flat amount of $40,000, but it also indicated the “full payment of each task will only be made at such time as each task is completed” and did not indicate whether the remaining payments were to be on the reimbursement basis or a flat amount. City staff was not able to provide documentation to support the payment of the contract in “installments” as noted in the vendor invoice.
Questioned Costs: We question the costs disbursed to the subrecipient for the fiscal year of $3,892 and we question the costs paid to the vendor in excess of the supporting documentation of $2,708.
Effect: The City is not in compliance with the allowable costs requirements of the grant program.
Cause: We understand that the City staff responsible for the grant reimbursements at the time are no longer with the City and current City staff could not determine if the original subrecipient agreement was amended to allow the change from personnel costs to rent and if the vendor contract payment had additional supporting documentation that totaled to the amount paid.
Recommendation: The City should develop procedures to ensure that subrecipient costs reimbursed are related to the costs in the approved subgrant agreement.
In addition, the City should work with the grantor to determine if the ineligible costs can be corrected on a future reimbursement request, or if the questioned costs need to be returned to the grantor.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-005: Cash Management
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The City should submit drawdown requests to San Joaquin County throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the County, unless specifically authorized by the grantor.
Condition: During our testing of grant expenditures and the associated drawdown requests, we noted the following:
• One program disbursement in May 2021 in the amount of $20,100 was not included on a reimbursement request until September 2021.
• One program disbursement in November 2020 in the amount of $14,063 was not included on a reimbursement request until August 2021.
• One disbursement on December 3, 2020 of $5,000 was included in an October 2020 reimbursement that was received on November 10, 2020.
• One disbursement on September 17, 2020 of $3,892 was included in a July 2020 reimbursement that was received on September 8, 2020.
• Three program disbursements totaling $123,693 under the CDBG-CV program were not included on a reimbursement request during fiscal year 2021 or subsequent.
Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the County. And, the City requested and received reimbursement nine to twenty-three days before making the associated payments to two of the vendors.
Cause: We understand that both the variety of program expenditures incurred during the fiscal year, administrated by different departmental staff and staff turnover led to the late preparation of reimbursements and/or failure to file reimbursement requests. City staff was unable to determine why certain program costs were included on reimbursement requests prior to making the associated vendor payments.
Recommendation: The City should develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. In addition, City staff should ensure that costs are incurred prior to including them on a reimbursement request.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-004: Allowable Subrecipient and Contract Costs
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The costs reimbursed to subrecipients and paid to vendors should not only be allowable under the grant program, the amounts paid should be supported by a contract or subgrant agreement with the entity.
Condition: During our testing of program expenditures for compliance with grant limitations and allowability, we noted that the City had a contract with a subrecipient for the Student Success Program, which included the personnel costs for the program/client coordinator of the program that provides basic and human schooling needs for eligible low-income children enrolled in the program. However, the costs reimbursed under the subrecipient agreement during fiscal year 2021 of $3,892 were for the subrecipient’s rent costs and not for costs related to the Student Success Program.
We also noted one vendor payment for costs related to running the Manteca Shelter in the amount of $50,000 that was supported by the vendor’s detail of expenses incurred for the period that totaled to only $47,292, a difference of $2,708. The contract with the vendor for the services provided indicated that it “shall not exceed” $225,000, and the first payment was to be a flat amount of $40,000, but it also indicated the “full payment of each task will only be made at such time as each task is completed” and did not indicate whether the remaining payments were to be on the reimbursement basis or a flat amount. City staff was not able to provide documentation to support the payment of the contract in “installments” as noted in the vendor invoice.
Questioned Costs: We question the costs disbursed to the subrecipient for the fiscal year of $3,892 and we question the costs paid to the vendor in excess of the supporting documentation of $2,708.
Effect: The City is not in compliance with the allowable costs requirements of the grant program.
Cause: We understand that the City staff responsible for the grant reimbursements at the time are no longer with the City and current City staff could not determine if the original subrecipient agreement was amended to allow the change from personnel costs to rent and if the vendor contract payment had additional supporting documentation that totaled to the amount paid.
Recommendation: The City should develop procedures to ensure that subrecipient costs reimbursed are related to the costs in the approved subgrant agreement.
In addition, the City should work with the grantor to determine if the ineligible costs can be corrected on a future reimbursement request, or if the questioned costs need to be returned to the grantor.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding #SA2021-005: Cash Management
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The City should submit drawdown requests to San Joaquin County throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the County, unless specifically authorized by the grantor.
Condition: During our testing of grant expenditures and the associated drawdown requests, we noted the following:
• One program disbursement in May 2021 in the amount of $20,100 was not included on a reimbursement request until September 2021.
• One program disbursement in November 2020 in the amount of $14,063 was not included on a reimbursement request until August 2021.
• One disbursement on December 3, 2020 of $5,000 was included in an October 2020 reimbursement that was received on November 10, 2020.
• One disbursement on September 17, 2020 of $3,892 was included in a July 2020 reimbursement that was received on September 8, 2020.
• Three program disbursements totaling $123,693 under the CDBG-CV program were not included on a reimbursement request during fiscal year 2021 or subsequent.
Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the County. And, the City requested and received reimbursement nine to twenty-three days before making the associated payments to two of the vendors.
Cause: We understand that both the variety of program expenditures incurred during the fiscal year, administrated by different departmental staff and staff turnover led to the late preparation of reimbursements and/or failure to file reimbursement requests. City staff was unable to determine why certain program costs were included on reimbursement requests prior to making the associated vendor payments.
Recommendation: The City should develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. In addition, City staff should ensure that costs are incurred prior to including them on a reimbursement request.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.