Audit 368245

Assistance Listing, Federal Agency, and Program Name - ALN 14.218, U.S. Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant Federal Award Identification Number and Year - B-20-MC-26-0033, B-21-MC-26-0033, B-22-MC-26-0033, B-23-MC-26-0033, B-24-MC-26-0033 Pass-through Entity - N/A Finding Type - Material weakness Repeat Finding - Yes Criteria - 24 CFR 570.506(b)(9)(ii) requires the Township to prepare and maintain a prerehabilitation inspection report describing the deficiencies to be rehabilitated for residential properties. The Township is also required to inspect the rehabilitation work upon completion to assure that it is carried out in accordance with rehabilitation standards. Condition - We noted no formal evidence that the stated control to ensure performance of required inspections prior to contract approval had been implemented effectively in one instance. We also noted no formal evidence that the stated control to verify inspections were performed upon project completion to ensure that work was carried out in accordance with contract specifications had been implemented effectively in one instance. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - N/A Context - During testing of seven rehabilitation projects, we noted that management was unable to provide evidence that a review took place over the pre inspection for one project or the post inspection for another project. However in both instances, the required inspections took place at the appropriate time as evidenced by detailed notes left by the Township representative charged with carrying out rehabilitation projects. Cause and Effect - The lack of documentation of an inspection performed that identified work to be performed prior to contract approval could result in questioned costs if the need for the rehabilitation work could not be substantiated. Recommendation - We recommend the Township implement controls to ensure a formal inspection report is prepared prior to approval of all rehabilitation contracts, including contracts for deficiencies identified after the initial prerehabilitation inspection process is complete. We also recommend implementing controls to ensure a formal inspection report is prepared upon completion of rehabilitation work to ensure that work was carried out in accordance with contract specifications. Additionally, we recommend implementing controls to ensure a review of ongoing rehabilitation projects occurs at a minimum on a monthly basis to ensure that prerehabilitation and postrehabilitation inspections are being performed. Views of Responsible Officials and Corrective Action Plan - Staff will review folders at various stages of the project to ensure all records of inspections at both the beginning and end of the project are in the file. Staff has already set up either bi weekly or monthly meetings (depending on project activity levels) to report on the status of ongoing projects. These meetings were intended to help staff keep current projects in line with the overall project budget (i.e. not obligating funds beyond what’s available). Using these same meetings to check project files for all necessary records will be an adjustment of negligible effort. In instances where there is a sizable gap between portions of a project (e.g. part of the project can’t be completed until spring) staff will consider closing out the completed portion of the project and completing a final inspection on the balance of the job at a later date.

Assistance Listing, Federal Agency, and Program Name - ALN 14.218, U.S. Department of Housing and Urban Development, CDBG Entitlement Grants Cluster - Community Development Block Grant Federal Award Identification Number and Year - B-20-MC-26-0033, B-21-MC-26-0033, B-22-MC-26-0033, B-23-MC-26-0033, B-24-MC-26-0033 Pass-through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - 29 CFR 5.5.ii.A requires that certified payrolls be submitted weekly to the Township for each week in which work is performed and for these records to be maintained for at least three years. Condition - We noted no indication that certified payrolls were obtained and reviewed by Township officials prior to payment being made to a contractor for construction work performed in one instance. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - N/A Context - There were several weeks during the year where contractors were being paid, but there was no documentation as to why there were no certified payrolls for those weeks. Cause and Effect - Lack of controls to ensure certified payrolls are received weekly for all applicable invoices prior to payment could result in questioned costs if such invoices include labor related costs. Recommendation - We recommend the Township implement controls to ensure that certified payroll is received weekly for all construction invoices prior to payment. This control should include a process to document procedures performed during weeks when certified payroll is not necessary. Views of Responsible Officials and Planned Corrective Actions - While controls are in place to ensure payments to vendors are not made without completed review of certified payrolls, staff acknowledges records kept did not provide adequate backup to verify these controls. Going forward, staff will not only be sure to keep copies of certified payrolls with related invoices, they will also maintain records that confirm invoices without certified payrolls did not include labor that is subject to Davis Bacon wage requirements. These records will likely come in the form of detailed invoice cost breakdowns (showing absence of labor costs) or correspondence affirming no labor costs were included in the invoice.