Audit 321162

Allowable Costs and Activities Questioned Costs: $63,100 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: ERAP program guidance issued by U.S. Treasury indicates that grantees must have controls in place to ensure compliance with their policies and procedures and prevent fraud. Condition: The City-Parish ERAP Program has policies and procedures in place to prevent and detect fraud from occurring, and four instances of known fraud were self-detected through execution of those policies and procedures. The Baton Rouge Police department was notified and these matters were investigated. This is a repeat of finding 2022-003 in our prior year report. Universe/ Population: Approximately 16,000 applications have been processed by the program since the program’s inception in 2021. Thirteen cases of fraud have been identified to date, three of which were identified in 2023. These cases have been referred to law enforcement. Effect: The City-Parish’s ERAP program fell victim to known fraud totaling approximately $63,100 in 2023 and $153,000 since the program’s inception in 2021. Cause: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish’s policies and procedures detected the fraud as required by program guidance. Recommendation: The City-Parish should continue to follow its established policies and procedures for preventing, detecting and deterring fraud. We encourage further data analysis and investigation to allow for further detection of potential fraud. View of Responsible Official: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish's policies and procedures detected the fraud as required by program guidance. Additional restrictions were implemented to further protect the program from fraud including no longer allowing any exceptions to homestead, not allowing any single-room rentals, and requiring a landlord provide documentation of 3 months of rental payments/deposits—no handwritten receipts accepted. The City-Parish also sent an email blast out to applicants to ensure they understood the additional documentation requirements. Consultants for the City-Parish provided a fraud detection tip sheet to case managers, consolidating previously given guidance, to assist them in determining potential incidents of fraud. There have been no instances of suspected fraud since July 2023 due to these measures.

Allowable Costs Questioned Costs: $22,000 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Cost charged to federal grant programs, including the Coronavirus State and Local Fiscal Recovery Program, must be allowable according to the Program’s rules and subjected to an adequate system of internal control. Condition: The City-Parish disbursed funds to a non-profit organization administered by City-Parish staff to cover costs of community violence intervention activities. Approximately $22,000 of costs reimbursed to the non-profit were duplicated charges also paid by another City-parish grant to the non-profit. This payment and others were not subjected to an adequate system of internal control, as the payment process lacked appropriate segregation of duties, a vital component of internal control. Universe/ Population: Of a sampling of 40 separate cash disbursements selected from the program’s costs, 1 was made to the non-profit organization in the amount of $366,635 which included the underlying duplicate payments of $22,000. Total payments to the non-profit from the City-Parish were $1,018,115. Effect: The City-Parish has an overpayment to the non-profit organization that needs to be recouped. Additionally, without appropriate segregation of duties, funds are at higher risk for additional errors or even misuse. Cause: Improper design of internal controls. Recommendation: Individuals involved with administering the non-profit organization should not approve disbursement of funds on-behalf of the City-Parish. View of Responsible Official: After reviewing the condition, cause, and effect of the presented Finding, the City-Parish finds it important to clarify that the duplicative charges were initially identified and documented as a self-reported finding. This discrepancy was discovered during the subrecipient monitoring component of this award and was promptly reported and reconciled prior to being presented as an audit finding. Upon identification of the duplicative charges, totaling approximately $22,000, immediate corrective action was taken to address the non-compliance. Dated January 5, 2024, a memorandum was filed disclosing the duplicative reimbursements, documenting the actions taken to rectify these charges, and recommending further steps to enhance the internal controls of the non-profit organization. The following information summarizes the East Baton Rouge City-Parish American Rescue Plan Act (ARPA): Duplication of Benefits - Findings and Corrective Action Memorandum: This memorandum documents the incidental reimbursement of multiple duplicative items associated with the subrecipient’s grant agreement and the corrective actions undertaken to resolve these findings, ensuring compliance with the terms of this award. During the routine subrecipient monitoring reviews, it was discovered that duplicate reimbursements occurred for 12 items between separate federal awards (American Rescue Plan Act SLFRF and CARES Act). In accordance with 2 CFR 200.522(c), a corrective action plan was provided to resolve the non-compliance. To address this, the following actions were taken: 1) Reconciliation of Duplicate Reimbursements: The non-profit entity has since reconciled the total value of $22,222.98 in duplicate reimbursements with an equivalent value of eligible expenses, including all necessary backup documentation to satisfy existing procurement and reimbursement requirements. 2) Development of a Duplication of Benefits Policy: It was recommended that the non-profit entity develop a comprehensive duplication of benefits policy to strengthen their internal controls further. These additional safeguards are considered best practices and are intended to minimize the risk of future non-compliance. Additionally, a comprehensive, grant specific, financial management policy template was provided to support the non-profits action to adopt and implement an appropriate standard of internal controls. The City-Parish is committed to maintaining robust internal controls and ensuring compliance with federal regulations. Immediate corrective measures were proactively taken to address these duplicative charges. Additionally, the City-Parish's third-party grants manager has established recurring weekly monitoring meetings with the non-profit entity to support the development and implementation of an adequate system of internal controls. Continuous efforts are being made to improve these processes to prevent such issues in the future.

Procurement, Suspension and Debarment Questioned Costs: $729,080 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Grant recipients must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. Purchases of equipment greater than $250,000 should be made using the sealed bid method. Condition: The City-Parish purchased Ford Explorers in the amount $729,080 without undergoing the bid process. Universe/ Population: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Effect: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Cause: The City-Parish has experienced turnover in the purchasing division in recent years. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. View of Responsible Official: Purchasing Department has implemented the following corrective actions to avoid this in the future: requisition checklist outlining guideline for compliance; creating standard operating procedure for purchase of vehicles for City-Parish Agencies; conduct routine departmental training; ensure that supervisor approvals prior to bid release.

Internal Controls over Project Costs Questioned Costs: Undetermined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Best practices in internal controls for construction projects suggests that application for payment be accompanied by architect certifications or construction site inspections by qualified personnel prior to payments to contractors or developers. Condition: The City-Parish does not require architect certifications prior to disbursement of funds for its HOME-funded housing projects under construction. Site inspections are conducted by City-Parish personnel, but they are inadequately documented and performed by office personnel. Universe/ Population: Our test of costs charged to the program included four projects involving construction or physical plant improvements. None of them had architect certifications. Effect: Without authoritative architect certification and/ or adequately documented site inspection, the City-Parish may be at risk of incurring unallowable or wasteful program costs. Cause: The Program believes the certifications are not required by the program and are not cost-beneficial given the relatively small size of their projects. Recommendation: Architectural certifications should be performed for construction projects. If the decision is to forego such certifications, then sections should be performed by qualified personnel and adequately documented. View of Responsible Official: Architect certification is not required by the Department of Housing and Urban Development nor our policies and procedures. It is listed in our contracts as one of the many different types of reimbursement documentation our office will accept. For many projects, an architect certification for each draw would be financially prohibitive and would likely reduce the financial viability of affordable housing developments. Our office does conduct intermittent on-site or desktop monitoring throughout the course of the project to ensure evidence activities. Additionally, all construction projects must complete permit requirements to ensure housing quality. Evidence of monitoring or activity was provided to the auditors.

Program Income Questioned Costs: $282,534 Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish’s primary HOME activities is the lending of funds for development of low-moderate income housing, single family home purchases and other purposes. These “soft secondary” loans are to be repaid in varying amounts and points-in time, depending on the development’s viability or borrowers’ ability to repay The City-Parish’s loan accounting process does not effectively demonstrate and ensure that all loan payments due and those collected were accounted for as program income. This is a repeat of finding 2022-011 in our prior year report. Universe/ Population: The City-Parish’s outsourced loan servicing company’s reports at year-end were compared to the program income in general ledger accounting records for the year. The reduction in the loan balances from 2022 to 2023 was $801,636 while program income shown as collected in the accounting records was $519,102, leaving an unaccounted-for difference of $282,534. Effect: The City-Parish may not be collecting all program income to which it is entitled which could result in fewer dollars for the program. Cause: The administration of the City-Parish’s HOME Program was in transition during 2023. Recommendation: To ensure completeness of loan collections received, the City-Parish should reconcile the change in loan balances to collection reports produced by the loan servicer and to program income in the general ledger. Overages and shortages should be thoroughly pursued View of Responsible Officials: The Office of Community Development utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD by the loan service agency monthly for staff approval. The OCD staff then reconciles this income monthly and submits the monthly report to the Finance Department for processing. Loan balances are not only altered by program income but also through loan forgiveness offered to low-to-moderate income residents. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD before being executed by the Parish Attorney’s Office to provide multiple layers of review. Case files are maintained at the OCD and documentation of monthly reconciling has been provided along with an accounting ledger. The OCD is working to improve monthly reconciling templates to include incurred fees from the loan servicing agency as well as forgiveness events to provide an accurate gross revenue

Special Tests and Provisions Questioned Costs: N/A Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): All grants identified on the Schedule of Expenditures of Federal Awards as HOME ALN #14.239 Criteria: During the period of affordability (i.e., the period for which the Nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction (City-Parish) must perform on-site inspections to determine compliance with property standards and verify the tenant occupancy information submitted by the owners. Additionally, these subrecipients must be monitored. Condition: The City-Parish has not performed the on-site inspections for, or adequately monitored, the affordable housing developments it has funded, as required. Additionally, the developments that are subject to on-site inspections have not been scheduled or planned. This is a repeat of finding 2022-012 in our prior year report. Universe/ Population: Of approximately 25 developments funded over the last several years and presumably within the period of affordability, none were site inspected and none were scheduled for site inspection/monitoring. Effect: The City-Parish’s HOME Program may be non-compliant with the program requirements that ensure housing quality and accessibility for targeted participants. Cause: The administration of the City-Parish’s HOME Program was in transition during 2023. Recommendation: The City-Parish should prioritize the planning, scheduling and execution of site monitoring for HOME funded developments in accordance with the program regulations. Additional human resources (internal or external) may be needed. View of Responsible Officials: The responsibility to monitor projects in the affordability period recently transferred to the City-Parish. However, our office has had insufficient capacity thus far to inspect all projects within their 20-year affordability period. We have prioritized inspection of projects currently under construction to ensure that our office can continues to meet our community’s affordable housing needs. Our team has worked diligently with the Finance Department, the Human Resources Department, and the Mayor-President’s Office to create an expanded organizational chart and capacity plan. That plan was approved by the EBR Metro Council earlier this year and hiring activities are ongoing. Simultaneously, we have procured additional consultant support to provide technical expertise throughout this monitoring.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee’s time for each pay period. Condition: Out of 20 employees’ time sheets/paychecks tested, 10 lacked supervisor approval. Universe/ Population: For a sample of 20 payroll charges totaling $25,786, we attempted to observe timesheets and their supervisory review to determine if proper internal controls were in place. Effect: Although further audit procedures indicated that the 10 employees’ costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of time sheet review and approval of a supervisor was not consistently maintained during the fiscal year. Recommendation: The WIOA (Employ BR) program should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: To improve the accuracy and timeliness of payroll processing, a revised payroll procedures manual will be developed and disseminated to all staff responsible for time approval. Additionally, mandatory training on the ExecuTime system will be conducted for these staff members to ensure they have the necessary skills for proper and timely time sheet approvals.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee’s time for each pay period. Condition: Out of 20 employees’ time sheets/paychecks tested, 10 lacked supervisor approval. Universe/ Population: For a sample of 20 payroll charges totaling $25,786, we attempted to observe timesheets and their supervisory review to determine if proper internal controls were in place. Effect: Although further audit procedures indicated that the 10 employees’ costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of time sheet review and approval of a supervisor was not consistently maintained during the fiscal year. Recommendation: The WIOA (Employ BR) program should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: To improve the accuracy and timeliness of payroll processing, a revised payroll procedures manual will be developed and disseminated to all staff responsible for time approval. Additionally, mandatory training on the ExecuTime system will be conducted for these staff members to ensure they have the necessary skills for proper and timely time sheet approvals.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee’s time for each pay period. Condition: Out of 20 employees’ time sheets/paychecks tested, 10 lacked supervisor approval. Universe/ Population: For a sample of 20 payroll charges totaling $25,786, we attempted to observe timesheets and their supervisory review to determine if proper internal controls were in place. Effect: Although further audit procedures indicated that the 10 employees’ costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of time sheet review and approval of a supervisor was not consistently maintained during the fiscal year. Recommendation: The WIOA (Employ BR) program should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: To improve the accuracy and timeliness of payroll processing, a revised payroll procedures manual will be developed and disseminated to all staff responsible for time approval. Additionally, mandatory training on the ExecuTime system will be conducted for these staff members to ensure they have the necessary skills for proper and timely time sheet approvals.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Program regulations state that tuition and educational benefits are to be disbursed on behalf of eligible recipients through the use of individual training accounts (ITA 's) established for each recipient. The local WIOA Board designed the program to employ the use of these accounts and has set account limit for each individual at various limits ranging from $10,000-$20,000. The Program should have an accounting system that ensures proper posting and tracking of ITA transactions and balances. Condition: The Program's administration’s process for tracking and accounting for program benefits through ITA’s is manual, kept in paper files, and is not reconciled to official accounting records of the City-Parish. Universe/ Population: A sampling of 25 participants among a population of 122 were selected for testing. Of the 25 tested, all participants’ ITA accounts were tracked through this manual process. Effect: The Program could potentially pay an amount in excess of the participant's allotted amount and be unaware of the overpayment. Cause: Transition of employees and administration have led to continuation of dated processes. While manual records may sometimes be adequate, they can be inefficient and prone to error. Recommendation: We recommend an electronic system to account for the ITA’s, such as a spreadsheet that is reconciled to the accounting system, or directly into the City-Parish’s accounting system with a project or other code. View of Responsible Official: To improve the accuracy of ITA tracking, a revised ITA tracking system will be implemented. This will include data entry fields to capture all necessary information for each ITA payment, minimizing errors and omissions. Reconciliation with MUNIS on a monthly basis to identify any discrepancies. Additionally, mandatory training on the revised ITA Tracking system will be conducted for relevant staff members to ensure continuity.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Program regulations state that tuition and educational benefits are to be disbursed on behalf of eligible recipients through the use of individual training accounts (ITA 's) established for each recipient. The local WIOA Board designed the program to employ the use of these accounts and has set account limit for each individual at various limits ranging from $10,000-$20,000. The Program should have an accounting system that ensures proper posting and tracking of ITA transactions and balances. Condition: The Program's administration’s process for tracking and accounting for program benefits through ITA’s is manual, kept in paper files, and is not reconciled to official accounting records of the City-Parish. Universe/ Population: A sampling of 25 participants among a population of 122 were selected for testing. Of the 25 tested, all participants’ ITA accounts were tracked through this manual process. Effect: The Program could potentially pay an amount in excess of the participant's allotted amount and be unaware of the overpayment. Cause: Transition of employees and administration have led to continuation of dated processes. While manual records may sometimes be adequate, they can be inefficient and prone to error. Recommendation: We recommend an electronic system to account for the ITA’s, such as a spreadsheet that is reconciled to the accounting system, or directly into the City-Parish’s accounting system with a project or other code. View of Responsible Official: To improve the accuracy of ITA tracking, a revised ITA tracking system will be implemented. This will include data entry fields to capture all necessary information for each ITA payment, minimizing errors and omissions. Reconciliation with MUNIS on a monthly basis to identify any discrepancies. Additionally, mandatory training on the revised ITA Tracking system will be conducted for relevant staff members to ensure continuity.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Program regulations state that tuition and educational benefits are to be disbursed on behalf of eligible recipients through the use of individual training accounts (ITA 's) established for each recipient. The local WIOA Board designed the program to employ the use of these accounts and has set account limit for each individual at various limits ranging from $10,000-$20,000. The Program should have an accounting system that ensures proper posting and tracking of ITA transactions and balances. Condition: The Program's administration’s process for tracking and accounting for program benefits through ITA’s is manual, kept in paper files, and is not reconciled to official accounting records of the City-Parish. Universe/ Population: A sampling of 25 participants among a population of 122 were selected for testing. Of the 25 tested, all participants’ ITA accounts were tracked through this manual process. Effect: The Program could potentially pay an amount in excess of the participant's allotted amount and be unaware of the overpayment. Cause: Transition of employees and administration have led to continuation of dated processes. While manual records may sometimes be adequate, they can be inefficient and prone to error. Recommendation: We recommend an electronic system to account for the ITA’s, such as a spreadsheet that is reconciled to the accounting system, or directly into the City-Parish’s accounting system with a project or other code. View of Responsible Official: To improve the accuracy of ITA tracking, a revised ITA tracking system will be implemented. This will include data entry fields to capture all necessary information for each ITA payment, minimizing errors and omissions. Reconciliation with MUNIS on a monthly basis to identify any discrepancies. Additionally, mandatory training on the revised ITA Tracking system will be conducted for relevant staff members to ensure continuity.

Allowable Costs and Activities Questioned Costs: $63,100 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: ERAP program guidance issued by U.S. Treasury indicates that grantees must have controls in place to ensure compliance with their policies and procedures and prevent fraud. Condition: The City-Parish ERAP Program has policies and procedures in place to prevent and detect fraud from occurring, and four instances of known fraud were self-detected through execution of those policies and procedures. The Baton Rouge Police department was notified and these matters were investigated. This is a repeat of finding 2022-003 in our prior year report. Universe/ Population: Approximately 16,000 applications have been processed by the program since the program’s inception in 2021. Thirteen cases of fraud have been identified to date, three of which were identified in 2023. These cases have been referred to law enforcement. Effect: The City-Parish’s ERAP program fell victim to known fraud totaling approximately $63,100 in 2023 and $153,000 since the program’s inception in 2021. Cause: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish’s policies and procedures detected the fraud as required by program guidance. Recommendation: The City-Parish should continue to follow its established policies and procedures for preventing, detecting and deterring fraud. We encourage further data analysis and investigation to allow for further detection of potential fraud. View of Responsible Official: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish's policies and procedures detected the fraud as required by program guidance. Additional restrictions were implemented to further protect the program from fraud including no longer allowing any exceptions to homestead, not allowing any single-room rentals, and requiring a landlord provide documentation of 3 months of rental payments/deposits—no handwritten receipts accepted. The City-Parish also sent an email blast out to applicants to ensure they understood the additional documentation requirements. Consultants for the City-Parish provided a fraud detection tip sheet to case managers, consolidating previously given guidance, to assist them in determining potential incidents of fraud. There have been no instances of suspected fraud since July 2023 due to these measures.

Allowable Costs Questioned Costs: $22,000 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Cost charged to federal grant programs, including the Coronavirus State and Local Fiscal Recovery Program, must be allowable according to the Program’s rules and subjected to an adequate system of internal control. Condition: The City-Parish disbursed funds to a non-profit organization administered by City-Parish staff to cover costs of community violence intervention activities. Approximately $22,000 of costs reimbursed to the non-profit were duplicated charges also paid by another City-parish grant to the non-profit. This payment and others were not subjected to an adequate system of internal control, as the payment process lacked appropriate segregation of duties, a vital component of internal control. Universe/ Population: Of a sampling of 40 separate cash disbursements selected from the program’s costs, 1 was made to the non-profit organization in the amount of $366,635 which included the underlying duplicate payments of $22,000. Total payments to the non-profit from the City-Parish were $1,018,115. Effect: The City-Parish has an overpayment to the non-profit organization that needs to be recouped. Additionally, without appropriate segregation of duties, funds are at higher risk for additional errors or even misuse. Cause: Improper design of internal controls. Recommendation: Individuals involved with administering the non-profit organization should not approve disbursement of funds on-behalf of the City-Parish. View of Responsible Official: After reviewing the condition, cause, and effect of the presented Finding, the City-Parish finds it important to clarify that the duplicative charges were initially identified and documented as a self-reported finding. This discrepancy was discovered during the subrecipient monitoring component of this award and was promptly reported and reconciled prior to being presented as an audit finding. Upon identification of the duplicative charges, totaling approximately $22,000, immediate corrective action was taken to address the non-compliance. Dated January 5, 2024, a memorandum was filed disclosing the duplicative reimbursements, documenting the actions taken to rectify these charges, and recommending further steps to enhance the internal controls of the non-profit organization. The following information summarizes the East Baton Rouge City-Parish American Rescue Plan Act (ARPA): Duplication of Benefits - Findings and Corrective Action Memorandum: This memorandum documents the incidental reimbursement of multiple duplicative items associated with the subrecipient’s grant agreement and the corrective actions undertaken to resolve these findings, ensuring compliance with the terms of this award. During the routine subrecipient monitoring reviews, it was discovered that duplicate reimbursements occurred for 12 items between separate federal awards (American Rescue Plan Act SLFRF and CARES Act). In accordance with 2 CFR 200.522(c), a corrective action plan was provided to resolve the non-compliance. To address this, the following actions were taken: 1) Reconciliation of Duplicate Reimbursements: The non-profit entity has since reconciled the total value of $22,222.98 in duplicate reimbursements with an equivalent value of eligible expenses, including all necessary backup documentation to satisfy existing procurement and reimbursement requirements. 2) Development of a Duplication of Benefits Policy: It was recommended that the non-profit entity develop a comprehensive duplication of benefits policy to strengthen their internal controls further. These additional safeguards are considered best practices and are intended to minimize the risk of future non-compliance. Additionally, a comprehensive, grant specific, financial management policy template was provided to support the non-profits action to adopt and implement an appropriate standard of internal controls. The City-Parish is committed to maintaining robust internal controls and ensuring compliance with federal regulations. Immediate corrective measures were proactively taken to address these duplicative charges. Additionally, the City-Parish's third-party grants manager has established recurring weekly monitoring meetings with the non-profit entity to support the development and implementation of an adequate system of internal controls. Continuous efforts are being made to improve these processes to prevent such issues in the future.

Procurement, Suspension and Debarment Questioned Costs: $729,080 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Grant recipients must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. Purchases of equipment greater than $250,000 should be made using the sealed bid method. Condition: The City-Parish purchased Ford Explorers in the amount $729,080 without undergoing the bid process. Universe/ Population: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Effect: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Cause: The City-Parish has experienced turnover in the purchasing division in recent years. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. View of Responsible Official: Purchasing Department has implemented the following corrective actions to avoid this in the future: requisition checklist outlining guideline for compliance; creating standard operating procedure for purchase of vehicles for City-Parish Agencies; conduct routine departmental training; ensure that supervisor approvals prior to bid release.

Internal Controls over Project Costs Questioned Costs: Undetermined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Best practices in internal controls for construction projects suggests that application for payment be accompanied by architect certifications or construction site inspections by qualified personnel prior to payments to contractors or developers. Condition: The City-Parish does not require architect certifications prior to disbursement of funds for its HOME-funded housing projects under construction. Site inspections are conducted by City-Parish personnel, but they are inadequately documented and performed by office personnel. Universe/ Population: Our test of costs charged to the program included four projects involving construction or physical plant improvements. None of them had architect certifications. Effect: Without authoritative architect certification and/ or adequately documented site inspection, the City-Parish may be at risk of incurring unallowable or wasteful program costs. Cause: The Program believes the certifications are not required by the program and are not cost-beneficial given the relatively small size of their projects. Recommendation: Architectural certifications should be performed for construction projects. If the decision is to forego such certifications, then sections should be performed by qualified personnel and adequately documented. View of Responsible Official: Architect certification is not required by the Department of Housing and Urban Development nor our policies and procedures. It is listed in our contracts as one of the many different types of reimbursement documentation our office will accept. For many projects, an architect certification for each draw would be financially prohibitive and would likely reduce the financial viability of affordable housing developments. Our office does conduct intermittent on-site or desktop monitoring throughout the course of the project to ensure evidence activities. Additionally, all construction projects must complete permit requirements to ensure housing quality. Evidence of monitoring or activity was provided to the auditors.

Program Income Questioned Costs: $282,534 Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish’s primary HOME activities is the lending of funds for development of low-moderate income housing, single family home purchases and other purposes. These “soft secondary” loans are to be repaid in varying amounts and points-in time, depending on the development’s viability or borrowers’ ability to repay The City-Parish’s loan accounting process does not effectively demonstrate and ensure that all loan payments due and those collected were accounted for as program income. This is a repeat of finding 2022-011 in our prior year report. Universe/ Population: The City-Parish’s outsourced loan servicing company’s reports at year-end were compared to the program income in general ledger accounting records for the year. The reduction in the loan balances from 2022 to 2023 was $801,636 while program income shown as collected in the accounting records was $519,102, leaving an unaccounted-for difference of $282,534. Effect: The City-Parish may not be collecting all program income to which it is entitled which could result in fewer dollars for the program. Cause: The administration of the City-Parish’s HOME Program was in transition during 2023. Recommendation: To ensure completeness of loan collections received, the City-Parish should reconcile the change in loan balances to collection reports produced by the loan servicer and to program income in the general ledger. Overages and shortages should be thoroughly pursued View of Responsible Officials: The Office of Community Development utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD by the loan service agency monthly for staff approval. The OCD staff then reconciles this income monthly and submits the monthly report to the Finance Department for processing. Loan balances are not only altered by program income but also through loan forgiveness offered to low-to-moderate income residents. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD before being executed by the Parish Attorney’s Office to provide multiple layers of review. Case files are maintained at the OCD and documentation of monthly reconciling has been provided along with an accounting ledger. The OCD is working to improve monthly reconciling templates to include incurred fees from the loan servicing agency as well as forgiveness events to provide an accurate gross revenue

Special Tests and Provisions Questioned Costs: N/A Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): All grants identified on the Schedule of Expenditures of Federal Awards as HOME ALN #14.239 Criteria: During the period of affordability (i.e., the period for which the Nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction (City-Parish) must perform on-site inspections to determine compliance with property standards and verify the tenant occupancy information submitted by the owners. Additionally, these subrecipients must be monitored. Condition: The City-Parish has not performed the on-site inspections for, or adequately monitored, the affordable housing developments it has funded, as required. Additionally, the developments that are subject to on-site inspections have not been scheduled or planned. This is a repeat of finding 2022-012 in our prior year report. Universe/ Population: Of approximately 25 developments funded over the last several years and presumably within the period of affordability, none were site inspected and none were scheduled for site inspection/monitoring. Effect: The City-Parish’s HOME Program may be non-compliant with the program requirements that ensure housing quality and accessibility for targeted participants. Cause: The administration of the City-Parish’s HOME Program was in transition during 2023. Recommendation: The City-Parish should prioritize the planning, scheduling and execution of site monitoring for HOME funded developments in accordance with the program regulations. Additional human resources (internal or external) may be needed. View of Responsible Officials: The responsibility to monitor projects in the affordability period recently transferred to the City-Parish. However, our office has had insufficient capacity thus far to inspect all projects within their 20-year affordability period. We have prioritized inspection of projects currently under construction to ensure that our office can continues to meet our community’s affordable housing needs. Our team has worked diligently with the Finance Department, the Human Resources Department, and the Mayor-President’s Office to create an expanded organizational chart and capacity plan. That plan was approved by the EBR Metro Council earlier this year and hiring activities are ongoing. Simultaneously, we have procured additional consultant support to provide technical expertise throughout this monitoring.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee’s time for each pay period. Condition: Out of 20 employees’ time sheets/paychecks tested, 10 lacked supervisor approval. Universe/ Population: For a sample of 20 payroll charges totaling $25,786, we attempted to observe timesheets and their supervisory review to determine if proper internal controls were in place. Effect: Although further audit procedures indicated that the 10 employees’ costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of time sheet review and approval of a supervisor was not consistently maintained during the fiscal year. Recommendation: The WIOA (Employ BR) program should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: To improve the accuracy and timeliness of payroll processing, a revised payroll procedures manual will be developed and disseminated to all staff responsible for time approval. Additionally, mandatory training on the ExecuTime system will be conducted for these staff members to ensure they have the necessary skills for proper and timely time sheet approvals.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee’s time for each pay period. Condition: Out of 20 employees’ time sheets/paychecks tested, 10 lacked supervisor approval. Universe/ Population: For a sample of 20 payroll charges totaling $25,786, we attempted to observe timesheets and their supervisory review to determine if proper internal controls were in place. Effect: Although further audit procedures indicated that the 10 employees’ costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of time sheet review and approval of a supervisor was not consistently maintained during the fiscal year. Recommendation: The WIOA (Employ BR) program should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: To improve the accuracy and timeliness of payroll processing, a revised payroll procedures manual will be developed and disseminated to all staff responsible for time approval. Additionally, mandatory training on the ExecuTime system will be conducted for these staff members to ensure they have the necessary skills for proper and timely time sheet approvals.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee’s time for each pay period. Condition: Out of 20 employees’ time sheets/paychecks tested, 10 lacked supervisor approval. Universe/ Population: For a sample of 20 payroll charges totaling $25,786, we attempted to observe timesheets and their supervisory review to determine if proper internal controls were in place. Effect: Although further audit procedures indicated that the 10 employees’ costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of time sheet review and approval of a supervisor was not consistently maintained during the fiscal year. Recommendation: The WIOA (Employ BR) program should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: To improve the accuracy and timeliness of payroll processing, a revised payroll procedures manual will be developed and disseminated to all staff responsible for time approval. Additionally, mandatory training on the ExecuTime system will be conducted for these staff members to ensure they have the necessary skills for proper and timely time sheet approvals.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Program regulations state that tuition and educational benefits are to be disbursed on behalf of eligible recipients through the use of individual training accounts (ITA 's) established for each recipient. The local WIOA Board designed the program to employ the use of these accounts and has set account limit for each individual at various limits ranging from $10,000-$20,000. The Program should have an accounting system that ensures proper posting and tracking of ITA transactions and balances. Condition: The Program's administration’s process for tracking and accounting for program benefits through ITA’s is manual, kept in paper files, and is not reconciled to official accounting records of the City-Parish. Universe/ Population: A sampling of 25 participants among a population of 122 were selected for testing. Of the 25 tested, all participants’ ITA accounts were tracked through this manual process. Effect: The Program could potentially pay an amount in excess of the participant's allotted amount and be unaware of the overpayment. Cause: Transition of employees and administration have led to continuation of dated processes. While manual records may sometimes be adequate, they can be inefficient and prone to error. Recommendation: We recommend an electronic system to account for the ITA’s, such as a spreadsheet that is reconciled to the accounting system, or directly into the City-Parish’s accounting system with a project or other code. View of Responsible Official: To improve the accuracy of ITA tracking, a revised ITA tracking system will be implemented. This will include data entry fields to capture all necessary information for each ITA payment, minimizing errors and omissions. Reconciliation with MUNIS on a monthly basis to identify any discrepancies. Additionally, mandatory training on the revised ITA Tracking system will be conducted for relevant staff members to ensure continuity.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Program regulations state that tuition and educational benefits are to be disbursed on behalf of eligible recipients through the use of individual training accounts (ITA 's) established for each recipient. The local WIOA Board designed the program to employ the use of these accounts and has set account limit for each individual at various limits ranging from $10,000-$20,000. The Program should have an accounting system that ensures proper posting and tracking of ITA transactions and balances. Condition: The Program's administration’s process for tracking and accounting for program benefits through ITA’s is manual, kept in paper files, and is not reconciled to official accounting records of the City-Parish. Universe/ Population: A sampling of 25 participants among a population of 122 were selected for testing. Of the 25 tested, all participants’ ITA accounts were tracked through this manual process. Effect: The Program could potentially pay an amount in excess of the participant's allotted amount and be unaware of the overpayment. Cause: Transition of employees and administration have led to continuation of dated processes. While manual records may sometimes be adequate, they can be inefficient and prone to error. Recommendation: We recommend an electronic system to account for the ITA’s, such as a spreadsheet that is reconciled to the accounting system, or directly into the City-Parish’s accounting system with a project or other code. View of Responsible Official: To improve the accuracy of ITA tracking, a revised ITA tracking system will be implemented. This will include data entry fields to capture all necessary information for each ITA payment, minimizing errors and omissions. Reconciliation with MUNIS on a monthly basis to identify any discrepancies. Additionally, mandatory training on the revised ITA Tracking system will be conducted for relevant staff members to ensure continuity.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Program regulations state that tuition and educational benefits are to be disbursed on behalf of eligible recipients through the use of individual training accounts (ITA 's) established for each recipient. The local WIOA Board designed the program to employ the use of these accounts and has set account limit for each individual at various limits ranging from $10,000-$20,000. The Program should have an accounting system that ensures proper posting and tracking of ITA transactions and balances. Condition: The Program's administration’s process for tracking and accounting for program benefits through ITA’s is manual, kept in paper files, and is not reconciled to official accounting records of the City-Parish. Universe/ Population: A sampling of 25 participants among a population of 122 were selected for testing. Of the 25 tested, all participants’ ITA accounts were tracked through this manual process. Effect: The Program could potentially pay an amount in excess of the participant's allotted amount and be unaware of the overpayment. Cause: Transition of employees and administration have led to continuation of dated processes. While manual records may sometimes be adequate, they can be inefficient and prone to error. Recommendation: We recommend an electronic system to account for the ITA’s, such as a spreadsheet that is reconciled to the accounting system, or directly into the City-Parish’s accounting system with a project or other code. View of Responsible Official: To improve the accuracy of ITA tracking, a revised ITA tracking system will be implemented. This will include data entry fields to capture all necessary information for each ITA payment, minimizing errors and omissions. Reconciliation with MUNIS on a monthly basis to identify any discrepancies. Additionally, mandatory training on the revised ITA Tracking system will be conducted for relevant staff members to ensure continuity.