2022-006) Reporting Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: A performance report, the CAPER, is required to be filed annually. The report was not filed. This is a repeat of finding 2021-006 in our prior year report. Universe/ Population: The one CAPER that was required to be filed (2021 program year) was selected for testing, however, it was not filed. Effect: The City-Parish may be in violation of the reporting requirements for this grant. Cause: The City-Parish transitioned the program?s administration during 2022. Another reason for the non-filing was that challenges with HUD?s filing portal continue. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: the City-Parish transitioned the administration of the Office of Community Development (OCD) in late 2021 throughout 2022. The staff requested access to the Department of Housing and Urban Development?s online reporting system, the Integrated Disbursement and Information System (IDIS) in order to complete the CAPER. The OCD staff did not receive access to IDIS until January 2023, at which time the OCD staff began working to complete the reports. The 2022 program year report was completed in June 2023. Moving forward, the new administration at the OCD is redesigning the reporting system for subrecipients and developers to increase the efficiency and accuracy of reporting. The new system should reduce staff burden and reduce the impact of staff transitions on reporting requirements in the future.
2022-007) Internal Controls for Allowable Costs Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Section 200.303 of the Uniform Guidance requires grant recipients to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. A key part of internal controls is knowledge and training of those individuals responsible for compliance in the cost principles, subpart E of the Uniform Guidance. Condition: Those responsible for administration of the CDBG entitlement grant are not fully trained in all of the aspects of the Uniform Guidance. Universe/ Population: Not applicable, the audit procedure detecting this condition did not involve transactional testing. Effect: The City-Parish?s internal controls might not detect and prevent unallowable costs to the programs. Cause: The City-Parish transitioned the CDBG program?s administration during 2022. Recommendation: Those responsible for grants administration and compliance should be fully trained in the cost principles of the Uniform Guidance. View of Responsible Officials: The City-Parish transitioned the administration of the OCD in late 2021 throughout 2022. The new leadership self-identified the need for additional staff training, coaching, and technical assistance and began to invest in individual development plans for all program administrators and analysts. While additional training can only improve knowledge of the Uniform Guidance and reduce the likelihood of internal controls not detecting and preventing unallowable costs to the programs. The OCD provided a sample of reimbursements to the auditors for transactional testing which indicated that no unallowable activities were permitted in 2022. The Office of Community Development had self-identified opportunities for certain process improvements for internal controls to detect issues in backup documentation. The City-Parish procured a software that will serve as the system of record and is currently implementing that new software. Moving forward, the OCD team will have the systems in place to assess, reject, and approve the documentation required from subrecipients more thoroughly and efficiently.
2022-008) Davis Bacon Wage Requirements Questioned Costs: Undetermined Department of Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): B-18-MC-22-0002 Criteria: Contracts and subcontracts involving construction activity with CDBG funds are subject to the Davis-Bacon prevailing wage requirements. As such, the City-Parish, as grantee, must monitor its subrecipients with construction activity to ensure that the subrecipient is monitoring the construction contractors for Davis Bacon prevailing wage requirements. Condition: The City-Parish did not sufficiently monitor its subrecipients to ensure their monitoring of contractors? compliance with Davis Bacon wage requirements. Universe/ Population: Two construction projects occurred in 2022 that were carried out through subrecipients. One of the two subrecipients was not monitored to ensure compliance with their Davis Bacon responsibilities. Effect: The City-Parish is non-compliant with the requirements to monitor its subrecipients with respect to Davis-Bacon compliance. Cause: The administration of the City-Parish?s CDBG Program was in transition during 2022. Recommendation: The City-Parish should develop a process to ensure its subrecipients are monitoring Davis Bacon compliance on their construction contracts. View of Responsible Official: All OCD contracts with developers include requirements to comply with Davis-Bacon. As part of the approved policies and procedures, the OCD requests evidence of Davis-Bacon compliance during the closeout of the project in order to ensure complete records. The OCD withholds the retainage at the end of the project until those records are received and reviewed as part of project close-out. The project cited for a lack of Davis-Bacon monitoring began the close-out process just as the audit was being finalized in June 2023 and per the OCD policy, the final reimbursement to the developer is being held until complete Davis Bacon records are submitted, reviewed, and approved. To implement best practices moving forward, the OCD is reviewing the policies and procedures and identifying ways to improve the collection and review of Davis-Bacon compliance. The current staff is scheduled to participate in training and is developing new reporting requirements in alignment with that training.
2022-009) Program Income Questioned Costs: Undetermined Department of Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): B-21-MC-22-0002, B-22-MC-22-0002 Criteria: Program income includes payments received from principal and interest on loans made with CDBG funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the CDBG 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 CDBG program activities is the lending of funds for development of low-moderate income housing 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. 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 2021 to 2022 was $180,776. These net loan reductions for the year were not reconciled with program income recorded in the general ledger. 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 CDBG Program was in transition during 2022. Recommendation: 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. Loans forgiven should be factored into the reconciliation as well. View of Responsible Official: The OCD 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. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD and the Office of the Mayor-President before being executed by the Parish Attorney?s Office to provide multiple layers of review. Case files are maintained at the OCD. Documentation of monthly reconciling has been provided along with an accounting ledger, but we acknowledge that this process could be improved. The OCD is working to develop additional internal controls and will evaluate the current loan service agency?s effectiveness at managing the portfolio.
2022-006) Reporting Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: A performance report, the CAPER, is required to be filed annually. The report was not filed. This is a repeat of finding 2021-006 in our prior year report. Universe/ Population: The one CAPER that was required to be filed (2021 program year) was selected for testing, however, it was not filed. Effect: The City-Parish may be in violation of the reporting requirements for this grant. Cause: The City-Parish transitioned the program?s administration during 2022. Another reason for the non-filing was that challenges with HUD?s filing portal continue. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: the City-Parish transitioned the administration of the Office of Community Development (OCD) in late 2021 throughout 2022. The staff requested access to the Department of Housing and Urban Development?s online reporting system, the Integrated Disbursement and Information System (IDIS) in order to complete the CAPER. The OCD staff did not receive access to IDIS until January 2023, at which time the OCD staff began working to complete the reports. The 2022 program year report was completed in June 2023. Moving forward, the new administration at the OCD is redesigning the reporting system for subrecipients and developers to increase the efficiency and accuracy of reporting. The new system should reduce staff burden and reduce the impact of staff transitions on reporting requirements in the future.
2022-007) Internal Controls for Allowable Costs Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Section 200.303 of the Uniform Guidance requires grant recipients to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. A key part of internal controls is knowledge and training of those individuals responsible for compliance in the cost principles, subpart E of the Uniform Guidance. Condition: Those responsible for administration of the CDBG entitlement grant are not fully trained in all of the aspects of the Uniform Guidance. Universe/ Population: Not applicable, the audit procedure detecting this condition did not involve transactional testing. Effect: The City-Parish?s internal controls might not detect and prevent unallowable costs to the programs. Cause: The City-Parish transitioned the CDBG program?s administration during 2022. Recommendation: Those responsible for grants administration and compliance should be fully trained in the cost principles of the Uniform Guidance. View of Responsible Officials: The City-Parish transitioned the administration of the OCD in late 2021 throughout 2022. The new leadership self-identified the need for additional staff training, coaching, and technical assistance and began to invest in individual development plans for all program administrators and analysts. While additional training can only improve knowledge of the Uniform Guidance and reduce the likelihood of internal controls not detecting and preventing unallowable costs to the programs. The OCD provided a sample of reimbursements to the auditors for transactional testing which indicated that no unallowable activities were permitted in 2022. The Office of Community Development had self-identified opportunities for certain process improvements for internal controls to detect issues in backup documentation. The City-Parish procured a software that will serve as the system of record and is currently implementing that new software. Moving forward, the OCD team will have the systems in place to assess, reject, and approve the documentation required from subrecipients more thoroughly and efficiently.
2022-010) Program Income Questioned Costs: Undetermined Department of 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 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 program activities is the lending of HOME funds for development of low-moderate income housing. Loans are to be repaid in varying amounts and times depending on the development?s viability and borrowers? ability to repay. The City-Parish has not included loans issued for recent housing development projects (since 2018) within the accounting and loan collection system with the outsourced company. Universe/ Population: Of approximately ten projects tested over past audit cycles and five new projects in 2022 that received HOME assistance in the form of loans, none of their balances appeared on the loan accounting ledger of the City-Parish. Effect: While some of these loans may not yet be to the point of payment, the City-Parish is nonetheless at risk for not collecting all program income if its loans are not added to the loan accounting ledger and accounted for properly, monitored, and serviced. Additionally, the City-Parish could be deficient in its ability to hold borrowers/developers accountable for on-going compliance. Cause: The administration of the City-Parish?s HOME Program was in transition during 2022. Recommendation: The City-Parish should contact its outsourced loan servicing company and include its recently issued HOME Multi-Family loans in its loan accounting, collection and reporting processes. View of Responsible Officials: The Office of Community Development (OCD) provides funding to affordable housing developers using Federal funds. Since 2021, the OCD has worked alongside dozens of developers, the State, and private investors to add over 800 units of affordable housing to our housing market. These affordable housing funds are often provided to nonprofits and local developers by means of a forgivable loan. This loan is intended to generate no income, but instead allows the City-Parish to place a lien on the property to enforce the long-term affordability requirements required by the Federal government.The outsourced loan servicing agency provides administrative support for the HOME mortgage program and interest generating activities; however, the affordable housing support is not a part of that scope. Instead, the City-Parish Parish Attorney?s Office works alongside the Office of Community Development and the Clerk of Courts to record the forgivable loans as liens on the property. The lien ensures that developers are unable to sell the home for market rate activities or otherwise dispense of the property or manage the property in a way that is incompliant with the Code of Federal Regulations.
2022-011) Program Income Questioned Costs: Undetermined Department of 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. 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 2021 to 2022 was $1,509,024 while program income was $823,325, leaving an unaccounted-for difference of $685,699. It is acknowledged that some of the difference could be attributable to forgiven loans. 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 2022. Recommendation: 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. Loans forgiven should be factored into the reconciliation as well. View of Responsible Official: The OCD 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 monthly for staff approval. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD and the Office of the Mayor-President before being executed by the Parish Attorney?s Office to provide multiple layers of review. Case files are maintained at the OCD. Documentation of monthly reconciling has been provided along with an accounting ledger on the change in the loan balance in 2022 as caused by escrow support and loan forgiveness activities for low to moderate income residents, but we acknowledge that this process could be improved. The OCD is working to develop additional internal controls and will evaluate the current loan service agency?s effectiveness at managing, reconciling, and providing reports on the portfolio.
2022-012) 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 information submitted by the owners. Condition: The City-Parish has not performed the on-site inspections for 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. Universe/ Population: Of approximately 20 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. 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 2022. 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 Official: The City-Parish transitioned the administration of the OCD in late 2021 and began hiring new staff throughout 2022. As the Office of Community Development onboarded staff in 2022, monitoring of affordable housing projects, previously conducted by the East Baton Rouge Parish Redevelopment Authority, had resumed. Additionally, the new leadership self-identified the need for additional monitoring and procured a consultant to provide a comprehensive third-party monitoring and assessment of all active subrecipients and developers. That review is anticipated to be completed in July of 2023.
2022-012) 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 information submitted by the owners. Condition: The City-Parish has not performed the on-site inspections for 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. Universe/ Population: Of approximately 20 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. 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 2022. 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 Official: The City-Parish transitioned the administration of the OCD in late 2021 and began hiring new staff throughout 2022. As the Office of Community Development onboarded staff in 2022, monitoring of affordable housing projects, previously conducted by the East Baton Rouge Parish Redevelopment Authority, had resumed. Additionally, the new leadership self-identified the need for additional monitoring and procured a consultant to provide a comprehensive third-party monitoring and assessment of all active subrecipients and developers. That review is anticipated to be completed in July of 2023.
2022-002) Reporting Questioned Costs: N/A Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: Financial and performance reports filed with granting agencies must be filed timely in accordance with program regulations and guidance and financial amounts must be supported by the accounting records. The ERAP 1 and ERAP 2 Programs require the filing of monthly and quarterly reports to include various information, including dollar amounts of assistance paid, number of households served, and other information. Condition: The City-Parish did not file all of the required monthly reports for ERAP 2. Furthermore, the financial amounts within both the monthly and quarterly reports were lacking in support from the accounting records of the City-Parish. This is a repeat of finding 2021-002 in our prior year report. Universe/ Population: Of twelve required monthly filings, we selected 12 months for the purpose of determining the timeliness of filing and to determine whether amounts were materially accurate and supported by the accounting records. Of the twelve required filings, six of the reports were not filed, and the six that were filed lacked support of the accounting records. Two of the eight quarterly reports (4 for ERAP 1 and 4 for ERAP 2) were subjected to audit. Neither of the reports selected for audit were filed timely and both included amounts that could not be supported by the accounting records. Effect: The amounts of assistance and other programmatic data may be reported inaccurately to the grantor, in this case, the United States Treasury. Cause: The City-Parish?s Finance Department was not sufficiently involved in the preparation and/or review of the monthly and quarterly reports. Recommendation: The monthly and quarterly reports should be prepared, or at least reviewed, by the City-Parish Finance Department to ensure the financial amounts reported agree to the accounting records. Also, the City-Parish?s procedures for preparing, reviewing, and filing financial reports should be revisited so they effectively ensure accurate and timely reporting to granting authorities. View of Responsible Official: The Office of Community Development (OCD) was in contact with the Treasury to resolve an error with the Treasury reporting portal that prevented report submission. The error was not resolved by Treasury until June 2022. The monthly report requires reporting of the number of households that received assistance and the total amount of ERAP funds paid for those participants in the reporting period. A City-Parish contractor issues the rental assistance and requests reimbursement from the City-Parish at a later date. The Treasury reports are due prior to the reimbursement being paid to the contractor. However, costs for the participants must still be included in the Treasury Report. Due to this timing difference, the monthly report would not be supported by the City-Parish accounting records at the time of the report being filed.
2022-003) Allowable Costs and Activities Questioned Costs: $37,009 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: ERAP program guidance issued by Treasury indicates that grantees must have controls in place to ensure compliance with their policies and procedures and prevent fraud. Condition: The City-Parish ERA Program has policies and procedures in place to prevent and detect fraud occurring in the ERAP, 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. Universe/ Population: Approximately 15,000 applications have been processed by the program since the program?s inception in 2021. Four cases of fraud identified in 2022 have been referred to law enforcement and an additional six cases were reported in the prior year. Effect: The City-Parish?s ERAP program fell victim to known fraud totaling approximately $37,009 in 2022 and $90,000 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 OCD has policies and procedures in place to prevent and detect fraud in the ERAP and will continue to follow its established policies and procedures. In addition, the ERAP has updated its program guidelines to forbid the provision of rental assistance to any single-family home rentals where the landlord holds homestead exemption. Any other single-family rentals owned by an individual will need to provide proof of payment and receipt of three months of rental assistance via cancelled checks or bank statements. This rule is being implemented due to evidence that most fraud cases involve single-family home rentals owned by individuals.
2022-004) Allowable Activities Questioned Costs: $612,283 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Activities funded by the program must satisfy the eligibility requirements of the Treasury?s Final Rule which outline four broad categories of use in responses to the global pandemic: 1) replacement of lost revenue; 2) public health and negative economic impacts; 3) premium pay for essential workers; and 4) sewer, water and broadband infrastructure. Furthermore, guidance issued by the Treasury (frequently asked questions dated 4/10/2023, question 4.2) suggests that outside of the revenue loss category, road and bridge constructions may not meet the eligibility requirements of the Final Rule. Condition: The City-Parish used funds to replace the Twin-Oaks bridge. This activity may not be an allowable activity. The costs incurred for this project in 2022 was $612,283. Universe/ Population: Of 40 separate cash disbursements tested, 1 was found to be of questionable compliance. Effect: The City-Parish?s bridge replacement project may not have been an allowable use of program funds. Questioned costs of $612,283. Cause: The City-Parish may have an overly broad interpretation of the Final Rule when determining allowable projects and activities. Additionally, we found that the process for determining allowable projects lacks formality, documentation, and a trail of accountability. Recommendation: The City-Parish should follow the Final Rule and associated guidance. If proposed projects and activities lack clear guidance, the justifications should be thoroughly explained, documented and approved through signature by appropriate personnel. View of Responsible Official: After reviewing the project scope, along with the U. S. Treasury Final Rule, the City-Parish believes that the bridge replacement is an allowable use of funds. Twin Oaks bridge was closed in 2015 in a very rural area. During the pandemic it became evident that citizens were unable to access healthcare quickly with the bridge closure. In addition, the bridge is causing major drainage issues in the Baker Canal. The replacement bridge will use watertight expansion joints so that all surface water can drain off the structure and collect in inlets placed at the bridge ends. The downstream ends of bridges need special attention which will collect and concentrate the stormwater away from the bridge. The concentrated flow will be directed into a low-risk erosion area. All runoff shall be directed away from wing walls, fill slopes, and embankments, so that no material is susceptible to erosion. Bridge drains are designed to reduce the amount of concentrated flows off a structure. The replacement of the bridge allows the Parish to address the subsurface drainage issues as well as respond to the public health and negative economic impacts of the pandemic.U.S. Treasury has specifically enumerated the flexibility provided under this expenditure category in the Final Rule excerpt: (second paragraph on the page 4411) ?Although the meaning of water and sewer infrastructure for purposes of sections 602(c)(1)(D) and 603(c)(1)(D) of the Social Security Act does not include all water-related uses, Treasury has made clear in this final rule that investments to infrastructure include a wide variety of projects. Treasury interprets the word ``infrastructure?? in this context broadly to mean the underlying framework or system for achieving the given public purpose, whether it be provision of drinking water or management of wastewater or stormwater. As discussed below, this can include not just storm drains and culverts for the management of stormwater, for example, but also bioretention basins and rain barrels implemented across a watershed, including on both public and private property, that together reduce the amount of runoff that needs to be managed by traditional infrastructure.?
2022-005) Allowable Costs Questioned Costs: $ 522,000 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 follow the Uniform Guidance (UG), subpart E. Salaries and benefits charged must meet the documentation standards of 200.430 by supporting the distribution of costs for employees working on more than one activity. Condition: The City-Parish lacked documentation to support the distribution of salaries and benefits for employees that worked on SLFR activities as well as non-SLFR activities. Universe/ Population: Of a sampling of 24 separate employee payroll charges, defined as an employee?s gross pay for a payroll period, 6 were charged to the Environmental Division of the City-Parish, and all 6 failed to meet the time distribution requirements of 200.430. The non-compliance appears to be limited to this division. Effect: The City-Parish may be non-compliant with the regulations for payroll and benefit costs of the Environmental Division that were charged to the SLFR resulting in questioned costs $522,000. Cause: The division?s administrators were unaware of the requirements of the UG subpart E 200.430. Recommendation: All divisions involved in administering federal programs should be advised and trained in the payroll documentation requirements of the UG. View of Responsible Official: In an effort to avoid non-compliance with the federal grant program, all employee payroll charges will be transferred to an alternative City-Parish funding source. If a federal grant program is used in the future for employee payroll charges, the employees will be trained on the applicable federal guidelines prior to use.
2022-013) Reporting Questioned Costs: N/A Department of the Health and Human Services 93.600 HeadStart Cluster Grant No(s): 06CH01155403 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: The SF-429 was not filed timely for 2022. The SF-429 Report is required to be submitted 30 days after year-end similar to the SF-425 Annual Report. City-Parish submitted the report on May 18, 2023, which exceeds the required timeframe. Universe/ Population: The Annual SF-429 is required to be filed and the population consisted of the one annual report Effect: The City-Parish may be non-compliant with the reporting requirements for this grant. Cause: The Head Start program?s regulations were relaxed during the COVID-19 pandemic. Resumption of filing procedures was slower than anticipated. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: The Head Start Program Administrator began working with Grants Management Solutions in December 2022 to obtain authorization to submit the report timely in Grants Management. After many conversations, the error by Grants Management Solution was resolved in May 2023 and the report was submitted and certified.
2022-014) Allowable costs Questioned Costs: $55,464 Department of the Health and Human Services 93.600 HeadStart Cluster Grant No(s): 06CH01155403 Criteria: The Uniform Guidance section 200.403 set forth general criteria for allowability, which include the requirement for costs to be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Condition: Costs of the City-Parish?s centralized risk management function, specifically those for general liability, professional liability and unemployment were charged and allocated to Head Start?s indirect costs pool. Insurance premiums for policies covering those risks were also charged as direct costs. Universe/ Population: The indirect cost pool used in determining the Program?s indirect cost rate for 2022 was derived from a prior year?s actual costs and amounted to $1,369,701, of which $82,036 was determined to be unallowable. Effect: The unallowed costs to HeadStart for 2022 resulting from the inclusion of the unallowed risk management cost in the indirect cost rate pool amounted to $55,464. Cause: This appears to be the result of an oversight error. Recommendation: All costs included in the indirect cost pools for allocation should be thoroughly reviewed by accounting and program personnel to ensure that the same type costs are not charged as both direct and indirect to federal programs. View of Responsible Officials: In developing the Cost Allocation Plan, the City-Parish previously excluded risk management costs in the calculation of the rate for the Head Start program. When the City-Parish began utilizing a new consultant to prepare the Cost Allocation Plan, the consultant included those costs in the rate calculation when they should have been excluded. The 2023 report will be revised to exclude costs for risk management functions and will continue to be excluded for future plans. The City-Parish does not charge the full amount of indirect costs that would be allowable based on the approved indirect cost rate to the grant programs that paid for the insurance policies. In 2022, the indirect cost allowable based on the approved rate was $1,410,223.04; however, only $131,232.00 was directly charged to the Head Start grant and $955,904.84 was used as in-kind match leaving a balance of $323,086.20 in allowable indirect cost that was not charged.
2022-006) Reporting Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: A performance report, the CAPER, is required to be filed annually. The report was not filed. This is a repeat of finding 2021-006 in our prior year report. Universe/ Population: The one CAPER that was required to be filed (2021 program year) was selected for testing, however, it was not filed. Effect: The City-Parish may be in violation of the reporting requirements for this grant. Cause: The City-Parish transitioned the program?s administration during 2022. Another reason for the non-filing was that challenges with HUD?s filing portal continue. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: the City-Parish transitioned the administration of the Office of Community Development (OCD) in late 2021 throughout 2022. The staff requested access to the Department of Housing and Urban Development?s online reporting system, the Integrated Disbursement and Information System (IDIS) in order to complete the CAPER. The OCD staff did not receive access to IDIS until January 2023, at which time the OCD staff began working to complete the reports. The 2022 program year report was completed in June 2023. Moving forward, the new administration at the OCD is redesigning the reporting system for subrecipients and developers to increase the efficiency and accuracy of reporting. The new system should reduce staff burden and reduce the impact of staff transitions on reporting requirements in the future.
2022-007) Internal Controls for Allowable Costs Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Section 200.303 of the Uniform Guidance requires grant recipients to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. A key part of internal controls is knowledge and training of those individuals responsible for compliance in the cost principles, subpart E of the Uniform Guidance. Condition: Those responsible for administration of the CDBG entitlement grant are not fully trained in all of the aspects of the Uniform Guidance. Universe/ Population: Not applicable, the audit procedure detecting this condition did not involve transactional testing. Effect: The City-Parish?s internal controls might not detect and prevent unallowable costs to the programs. Cause: The City-Parish transitioned the CDBG program?s administration during 2022. Recommendation: Those responsible for grants administration and compliance should be fully trained in the cost principles of the Uniform Guidance. View of Responsible Officials: The City-Parish transitioned the administration of the OCD in late 2021 throughout 2022. The new leadership self-identified the need for additional staff training, coaching, and technical assistance and began to invest in individual development plans for all program administrators and analysts. While additional training can only improve knowledge of the Uniform Guidance and reduce the likelihood of internal controls not detecting and preventing unallowable costs to the programs. The OCD provided a sample of reimbursements to the auditors for transactional testing which indicated that no unallowable activities were permitted in 2022. The Office of Community Development had self-identified opportunities for certain process improvements for internal controls to detect issues in backup documentation. The City-Parish procured a software that will serve as the system of record and is currently implementing that new software. Moving forward, the OCD team will have the systems in place to assess, reject, and approve the documentation required from subrecipients more thoroughly and efficiently.
2022-008) Davis Bacon Wage Requirements Questioned Costs: Undetermined Department of Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): B-18-MC-22-0002 Criteria: Contracts and subcontracts involving construction activity with CDBG funds are subject to the Davis-Bacon prevailing wage requirements. As such, the City-Parish, as grantee, must monitor its subrecipients with construction activity to ensure that the subrecipient is monitoring the construction contractors for Davis Bacon prevailing wage requirements. Condition: The City-Parish did not sufficiently monitor its subrecipients to ensure their monitoring of contractors? compliance with Davis Bacon wage requirements. Universe/ Population: Two construction projects occurred in 2022 that were carried out through subrecipients. One of the two subrecipients was not monitored to ensure compliance with their Davis Bacon responsibilities. Effect: The City-Parish is non-compliant with the requirements to monitor its subrecipients with respect to Davis-Bacon compliance. Cause: The administration of the City-Parish?s CDBG Program was in transition during 2022. Recommendation: The City-Parish should develop a process to ensure its subrecipients are monitoring Davis Bacon compliance on their construction contracts. View of Responsible Official: All OCD contracts with developers include requirements to comply with Davis-Bacon. As part of the approved policies and procedures, the OCD requests evidence of Davis-Bacon compliance during the closeout of the project in order to ensure complete records. The OCD withholds the retainage at the end of the project until those records are received and reviewed as part of project close-out. The project cited for a lack of Davis-Bacon monitoring began the close-out process just as the audit was being finalized in June 2023 and per the OCD policy, the final reimbursement to the developer is being held until complete Davis Bacon records are submitted, reviewed, and approved. To implement best practices moving forward, the OCD is reviewing the policies and procedures and identifying ways to improve the collection and review of Davis-Bacon compliance. The current staff is scheduled to participate in training and is developing new reporting requirements in alignment with that training.
2022-009) Program Income Questioned Costs: Undetermined Department of Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): B-21-MC-22-0002, B-22-MC-22-0002 Criteria: Program income includes payments received from principal and interest on loans made with CDBG funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the CDBG 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 CDBG program activities is the lending of funds for development of low-moderate income housing 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. 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 2021 to 2022 was $180,776. These net loan reductions for the year were not reconciled with program income recorded in the general ledger. 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 CDBG Program was in transition during 2022. Recommendation: 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. Loans forgiven should be factored into the reconciliation as well. View of Responsible Official: The OCD 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. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD and the Office of the Mayor-President before being executed by the Parish Attorney?s Office to provide multiple layers of review. Case files are maintained at the OCD. Documentation of monthly reconciling has been provided along with an accounting ledger, but we acknowledge that this process could be improved. The OCD is working to develop additional internal controls and will evaluate the current loan service agency?s effectiveness at managing the portfolio.
2022-006) Reporting Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: A performance report, the CAPER, is required to be filed annually. The report was not filed. This is a repeat of finding 2021-006 in our prior year report. Universe/ Population: The one CAPER that was required to be filed (2021 program year) was selected for testing, however, it was not filed. Effect: The City-Parish may be in violation of the reporting requirements for this grant. Cause: The City-Parish transitioned the program?s administration during 2022. Another reason for the non-filing was that challenges with HUD?s filing portal continue. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: the City-Parish transitioned the administration of the Office of Community Development (OCD) in late 2021 throughout 2022. The staff requested access to the Department of Housing and Urban Development?s online reporting system, the Integrated Disbursement and Information System (IDIS) in order to complete the CAPER. The OCD staff did not receive access to IDIS until January 2023, at which time the OCD staff began working to complete the reports. The 2022 program year report was completed in June 2023. Moving forward, the new administration at the OCD is redesigning the reporting system for subrecipients and developers to increase the efficiency and accuracy of reporting. The new system should reduce staff burden and reduce the impact of staff transitions on reporting requirements in the future.
2022-007) Internal Controls for Allowable Costs Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Section 200.303 of the Uniform Guidance requires grant recipients to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. A key part of internal controls is knowledge and training of those individuals responsible for compliance in the cost principles, subpart E of the Uniform Guidance. Condition: Those responsible for administration of the CDBG entitlement grant are not fully trained in all of the aspects of the Uniform Guidance. Universe/ Population: Not applicable, the audit procedure detecting this condition did not involve transactional testing. Effect: The City-Parish?s internal controls might not detect and prevent unallowable costs to the programs. Cause: The City-Parish transitioned the CDBG program?s administration during 2022. Recommendation: Those responsible for grants administration and compliance should be fully trained in the cost principles of the Uniform Guidance. View of Responsible Officials: The City-Parish transitioned the administration of the OCD in late 2021 throughout 2022. The new leadership self-identified the need for additional staff training, coaching, and technical assistance and began to invest in individual development plans for all program administrators and analysts. While additional training can only improve knowledge of the Uniform Guidance and reduce the likelihood of internal controls not detecting and preventing unallowable costs to the programs. The OCD provided a sample of reimbursements to the auditors for transactional testing which indicated that no unallowable activities were permitted in 2022. The Office of Community Development had self-identified opportunities for certain process improvements for internal controls to detect issues in backup documentation. The City-Parish procured a software that will serve as the system of record and is currently implementing that new software. Moving forward, the OCD team will have the systems in place to assess, reject, and approve the documentation required from subrecipients more thoroughly and efficiently.
2022-010) Program Income Questioned Costs: Undetermined Department of 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 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 program activities is the lending of HOME funds for development of low-moderate income housing. Loans are to be repaid in varying amounts and times depending on the development?s viability and borrowers? ability to repay. The City-Parish has not included loans issued for recent housing development projects (since 2018) within the accounting and loan collection system with the outsourced company. Universe/ Population: Of approximately ten projects tested over past audit cycles and five new projects in 2022 that received HOME assistance in the form of loans, none of their balances appeared on the loan accounting ledger of the City-Parish. Effect: While some of these loans may not yet be to the point of payment, the City-Parish is nonetheless at risk for not collecting all program income if its loans are not added to the loan accounting ledger and accounted for properly, monitored, and serviced. Additionally, the City-Parish could be deficient in its ability to hold borrowers/developers accountable for on-going compliance. Cause: The administration of the City-Parish?s HOME Program was in transition during 2022. Recommendation: The City-Parish should contact its outsourced loan servicing company and include its recently issued HOME Multi-Family loans in its loan accounting, collection and reporting processes. View of Responsible Officials: The Office of Community Development (OCD) provides funding to affordable housing developers using Federal funds. Since 2021, the OCD has worked alongside dozens of developers, the State, and private investors to add over 800 units of affordable housing to our housing market. These affordable housing funds are often provided to nonprofits and local developers by means of a forgivable loan. This loan is intended to generate no income, but instead allows the City-Parish to place a lien on the property to enforce the long-term affordability requirements required by the Federal government.The outsourced loan servicing agency provides administrative support for the HOME mortgage program and interest generating activities; however, the affordable housing support is not a part of that scope. Instead, the City-Parish Parish Attorney?s Office works alongside the Office of Community Development and the Clerk of Courts to record the forgivable loans as liens on the property. The lien ensures that developers are unable to sell the home for market rate activities or otherwise dispense of the property or manage the property in a way that is incompliant with the Code of Federal Regulations.
2022-011) Program Income Questioned Costs: Undetermined Department of 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. 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 2021 to 2022 was $1,509,024 while program income was $823,325, leaving an unaccounted-for difference of $685,699. It is acknowledged that some of the difference could be attributable to forgiven loans. 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 2022. Recommendation: 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. Loans forgiven should be factored into the reconciliation as well. View of Responsible Official: The OCD 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 monthly for staff approval. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD and the Office of the Mayor-President before being executed by the Parish Attorney?s Office to provide multiple layers of review. Case files are maintained at the OCD. Documentation of monthly reconciling has been provided along with an accounting ledger on the change in the loan balance in 2022 as caused by escrow support and loan forgiveness activities for low to moderate income residents, but we acknowledge that this process could be improved. The OCD is working to develop additional internal controls and will evaluate the current loan service agency?s effectiveness at managing, reconciling, and providing reports on the portfolio.
2022-012) 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 information submitted by the owners. Condition: The City-Parish has not performed the on-site inspections for 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. Universe/ Population: Of approximately 20 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. 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 2022. 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 Official: The City-Parish transitioned the administration of the OCD in late 2021 and began hiring new staff throughout 2022. As the Office of Community Development onboarded staff in 2022, monitoring of affordable housing projects, previously conducted by the East Baton Rouge Parish Redevelopment Authority, had resumed. Additionally, the new leadership self-identified the need for additional monitoring and procured a consultant to provide a comprehensive third-party monitoring and assessment of all active subrecipients and developers. That review is anticipated to be completed in July of 2023.
2022-012) 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 information submitted by the owners. Condition: The City-Parish has not performed the on-site inspections for 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. Universe/ Population: Of approximately 20 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. 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 2022. 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 Official: The City-Parish transitioned the administration of the OCD in late 2021 and began hiring new staff throughout 2022. As the Office of Community Development onboarded staff in 2022, monitoring of affordable housing projects, previously conducted by the East Baton Rouge Parish Redevelopment Authority, had resumed. Additionally, the new leadership self-identified the need for additional monitoring and procured a consultant to provide a comprehensive third-party monitoring and assessment of all active subrecipients and developers. That review is anticipated to be completed in July of 2023.
2022-002) Reporting Questioned Costs: N/A Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: Financial and performance reports filed with granting agencies must be filed timely in accordance with program regulations and guidance and financial amounts must be supported by the accounting records. The ERAP 1 and ERAP 2 Programs require the filing of monthly and quarterly reports to include various information, including dollar amounts of assistance paid, number of households served, and other information. Condition: The City-Parish did not file all of the required monthly reports for ERAP 2. Furthermore, the financial amounts within both the monthly and quarterly reports were lacking in support from the accounting records of the City-Parish. This is a repeat of finding 2021-002 in our prior year report. Universe/ Population: Of twelve required monthly filings, we selected 12 months for the purpose of determining the timeliness of filing and to determine whether amounts were materially accurate and supported by the accounting records. Of the twelve required filings, six of the reports were not filed, and the six that were filed lacked support of the accounting records. Two of the eight quarterly reports (4 for ERAP 1 and 4 for ERAP 2) were subjected to audit. Neither of the reports selected for audit were filed timely and both included amounts that could not be supported by the accounting records. Effect: The amounts of assistance and other programmatic data may be reported inaccurately to the grantor, in this case, the United States Treasury. Cause: The City-Parish?s Finance Department was not sufficiently involved in the preparation and/or review of the monthly and quarterly reports. Recommendation: The monthly and quarterly reports should be prepared, or at least reviewed, by the City-Parish Finance Department to ensure the financial amounts reported agree to the accounting records. Also, the City-Parish?s procedures for preparing, reviewing, and filing financial reports should be revisited so they effectively ensure accurate and timely reporting to granting authorities. View of Responsible Official: The Office of Community Development (OCD) was in contact with the Treasury to resolve an error with the Treasury reporting portal that prevented report submission. The error was not resolved by Treasury until June 2022. The monthly report requires reporting of the number of households that received assistance and the total amount of ERAP funds paid for those participants in the reporting period. A City-Parish contractor issues the rental assistance and requests reimbursement from the City-Parish at a later date. The Treasury reports are due prior to the reimbursement being paid to the contractor. However, costs for the participants must still be included in the Treasury Report. Due to this timing difference, the monthly report would not be supported by the City-Parish accounting records at the time of the report being filed.
2022-003) Allowable Costs and Activities Questioned Costs: $37,009 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: ERAP program guidance issued by Treasury indicates that grantees must have controls in place to ensure compliance with their policies and procedures and prevent fraud. Condition: The City-Parish ERA Program has policies and procedures in place to prevent and detect fraud occurring in the ERAP, 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. Universe/ Population: Approximately 15,000 applications have been processed by the program since the program?s inception in 2021. Four cases of fraud identified in 2022 have been referred to law enforcement and an additional six cases were reported in the prior year. Effect: The City-Parish?s ERAP program fell victim to known fraud totaling approximately $37,009 in 2022 and $90,000 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 OCD has policies and procedures in place to prevent and detect fraud in the ERAP and will continue to follow its established policies and procedures. In addition, the ERAP has updated its program guidelines to forbid the provision of rental assistance to any single-family home rentals where the landlord holds homestead exemption. Any other single-family rentals owned by an individual will need to provide proof of payment and receipt of three months of rental assistance via cancelled checks or bank statements. This rule is being implemented due to evidence that most fraud cases involve single-family home rentals owned by individuals.
2022-004) Allowable Activities Questioned Costs: $612,283 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Activities funded by the program must satisfy the eligibility requirements of the Treasury?s Final Rule which outline four broad categories of use in responses to the global pandemic: 1) replacement of lost revenue; 2) public health and negative economic impacts; 3) premium pay for essential workers; and 4) sewer, water and broadband infrastructure. Furthermore, guidance issued by the Treasury (frequently asked questions dated 4/10/2023, question 4.2) suggests that outside of the revenue loss category, road and bridge constructions may not meet the eligibility requirements of the Final Rule. Condition: The City-Parish used funds to replace the Twin-Oaks bridge. This activity may not be an allowable activity. The costs incurred for this project in 2022 was $612,283. Universe/ Population: Of 40 separate cash disbursements tested, 1 was found to be of questionable compliance. Effect: The City-Parish?s bridge replacement project may not have been an allowable use of program funds. Questioned costs of $612,283. Cause: The City-Parish may have an overly broad interpretation of the Final Rule when determining allowable projects and activities. Additionally, we found that the process for determining allowable projects lacks formality, documentation, and a trail of accountability. Recommendation: The City-Parish should follow the Final Rule and associated guidance. If proposed projects and activities lack clear guidance, the justifications should be thoroughly explained, documented and approved through signature by appropriate personnel. View of Responsible Official: After reviewing the project scope, along with the U. S. Treasury Final Rule, the City-Parish believes that the bridge replacement is an allowable use of funds. Twin Oaks bridge was closed in 2015 in a very rural area. During the pandemic it became evident that citizens were unable to access healthcare quickly with the bridge closure. In addition, the bridge is causing major drainage issues in the Baker Canal. The replacement bridge will use watertight expansion joints so that all surface water can drain off the structure and collect in inlets placed at the bridge ends. The downstream ends of bridges need special attention which will collect and concentrate the stormwater away from the bridge. The concentrated flow will be directed into a low-risk erosion area. All runoff shall be directed away from wing walls, fill slopes, and embankments, so that no material is susceptible to erosion. Bridge drains are designed to reduce the amount of concentrated flows off a structure. The replacement of the bridge allows the Parish to address the subsurface drainage issues as well as respond to the public health and negative economic impacts of the pandemic.U.S. Treasury has specifically enumerated the flexibility provided under this expenditure category in the Final Rule excerpt: (second paragraph on the page 4411) ?Although the meaning of water and sewer infrastructure for purposes of sections 602(c)(1)(D) and 603(c)(1)(D) of the Social Security Act does not include all water-related uses, Treasury has made clear in this final rule that investments to infrastructure include a wide variety of projects. Treasury interprets the word ``infrastructure?? in this context broadly to mean the underlying framework or system for achieving the given public purpose, whether it be provision of drinking water or management of wastewater or stormwater. As discussed below, this can include not just storm drains and culverts for the management of stormwater, for example, but also bioretention basins and rain barrels implemented across a watershed, including on both public and private property, that together reduce the amount of runoff that needs to be managed by traditional infrastructure.?
2022-005) Allowable Costs Questioned Costs: $ 522,000 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 follow the Uniform Guidance (UG), subpart E. Salaries and benefits charged must meet the documentation standards of 200.430 by supporting the distribution of costs for employees working on more than one activity. Condition: The City-Parish lacked documentation to support the distribution of salaries and benefits for employees that worked on SLFR activities as well as non-SLFR activities. Universe/ Population: Of a sampling of 24 separate employee payroll charges, defined as an employee?s gross pay for a payroll period, 6 were charged to the Environmental Division of the City-Parish, and all 6 failed to meet the time distribution requirements of 200.430. The non-compliance appears to be limited to this division. Effect: The City-Parish may be non-compliant with the regulations for payroll and benefit costs of the Environmental Division that were charged to the SLFR resulting in questioned costs $522,000. Cause: The division?s administrators were unaware of the requirements of the UG subpart E 200.430. Recommendation: All divisions involved in administering federal programs should be advised and trained in the payroll documentation requirements of the UG. View of Responsible Official: In an effort to avoid non-compliance with the federal grant program, all employee payroll charges will be transferred to an alternative City-Parish funding source. If a federal grant program is used in the future for employee payroll charges, the employees will be trained on the applicable federal guidelines prior to use.
2022-013) Reporting Questioned Costs: N/A Department of the Health and Human Services 93.600 HeadStart Cluster Grant No(s): 06CH01155403 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: The SF-429 was not filed timely for 2022. The SF-429 Report is required to be submitted 30 days after year-end similar to the SF-425 Annual Report. City-Parish submitted the report on May 18, 2023, which exceeds the required timeframe. Universe/ Population: The Annual SF-429 is required to be filed and the population consisted of the one annual report Effect: The City-Parish may be non-compliant with the reporting requirements for this grant. Cause: The Head Start program?s regulations were relaxed during the COVID-19 pandemic. Resumption of filing procedures was slower than anticipated. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: The Head Start Program Administrator began working with Grants Management Solutions in December 2022 to obtain authorization to submit the report timely in Grants Management. After many conversations, the error by Grants Management Solution was resolved in May 2023 and the report was submitted and certified.
2022-014) Allowable costs Questioned Costs: $55,464 Department of the Health and Human Services 93.600 HeadStart Cluster Grant No(s): 06CH01155403 Criteria: The Uniform Guidance section 200.403 set forth general criteria for allowability, which include the requirement for costs to be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Condition: Costs of the City-Parish?s centralized risk management function, specifically those for general liability, professional liability and unemployment were charged and allocated to Head Start?s indirect costs pool. Insurance premiums for policies covering those risks were also charged as direct costs. Universe/ Population: The indirect cost pool used in determining the Program?s indirect cost rate for 2022 was derived from a prior year?s actual costs and amounted to $1,369,701, of which $82,036 was determined to be unallowable. Effect: The unallowed costs to HeadStart for 2022 resulting from the inclusion of the unallowed risk management cost in the indirect cost rate pool amounted to $55,464. Cause: This appears to be the result of an oversight error. Recommendation: All costs included in the indirect cost pools for allocation should be thoroughly reviewed by accounting and program personnel to ensure that the same type costs are not charged as both direct and indirect to federal programs. View of Responsible Officials: In developing the Cost Allocation Plan, the City-Parish previously excluded risk management costs in the calculation of the rate for the Head Start program. When the City-Parish began utilizing a new consultant to prepare the Cost Allocation Plan, the consultant included those costs in the rate calculation when they should have been excluded. The 2023 report will be revised to exclude costs for risk management functions and will continue to be excluded for future plans. The City-Parish does not charge the full amount of indirect costs that would be allowable based on the approved indirect cost rate to the grant programs that paid for the insurance policies. In 2022, the indirect cost allowable based on the approved rate was $1,410,223.04; however, only $131,232.00 was directly charged to the Head Start grant and $955,904.84 was used as in-kind match leaving a balance of $323,086.20 in allowable indirect cost that was not charged.