Audit 6483

Finding 2022-001 Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22 - 12/31/22 Compliance/Internal Control over Compliance: Cash Management Criteria or specific requirement: 2 CFR Part 200 Appendix XI Compliance Supplement, Section 3.2C. Cash management requires that program costs must be paid by the Township before reimbursement is requested from the Federal government. Also, interest earned in excess of $100 on grant advances held in an interest-bearing account must be remitted to the U.S. Treasury. Condition: The Township has requested expenditure reimbursements in IDIS for expenditures that were not made or, in the past, has requested draw downs in excess of documented expenditures. This has resulted in a substantial reconciled cash balance for which no identifiable purpose could be identified. Questioned costs: Undetermined Context: During our review of cash management and cash on hand reporting, we identified a substantial reconciled balance in the Township’s accounts which do not have an identifiable purpose. This is a result of the Township requesting reimbursement for expenditures that were either not actually incurred or for administrative expenses that were drawn down in excess of supporting documentation or for reimbursement of program costs that were not transferred out of the account. Effect: The Township has a substantial reconciled cash balance with no identifiable purpose. Interest is accumulating on grant advances in excess of $100 and not being remitted to the U.S. Treasury. Cause: Financial drawdown policies and procedures are lacking and/or inadequate. There has been a history of staff drawing down funds in excess of actual expenditures or drawing down grant allocations for expenses incurred by other programs and then not reimbursing the Township’s current budget for those eligible expenses. Drawdown procedures are not consistently performed as expenses are incurred. Recommendation: The Township’s drawdown policies and procedures be enhanced; that only actual supported expenditures be drawn down from the approved project. Detailed supporting documentation and expenditure records related to drawdowns for expenses incurred by the Township for CDBG Programs administered through its general budget be provided for auditor review and those drawdowns be remitted to the Township for reimbursement. Management’s response: The Township of Bloomfield should establish financial drawdown policies and provide training to its staff to ensure compliance with the cash management compliance requirements of the Community Development Block Grant Program. Steps have been taken to solicit approval from HUD to utilize the unallocated balance of funds in the Community Development Bank account for grant eligible projects.

Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22-12/31/22 Compliance/Internal Control over Compliance: Allowable Costs Criteria or specific requirement: Charges to federal awards for administrative related expenditures be supported by detailed documentation and eligible expenses should be charged to the applicable program year. Condition: There were equipment rental charges being posted to administration for which supporting documentation could not be provided. Withdrawals from the administrative grant allotments were not in agreement with charges incurred. Questioned costs: Undetermined Context: During our review of budgetary expenditures, we found that rental charges for equipment were not substantiated to actual equipment location. Administrative drawdowns through IDIS were also not in agreement with the actual budgetary expenditures resulting in an insufficient drawdown of approximately $65,527. Effect: Administrative expenditures are not accurately charged to administration nor are drawdowns through IDIS in agreement with actual expenditures. Cause: Drawdown procedures concerning administrative costs (payroll and other expenses) are not performed ratably as expenses are incurred; procedures are not in place to ensure the correct employees and corresponding salaries are being allocated correctly. Recommendation: Drawdowns through IDIS for payroll and other administrative charges be made as incurred; employee charges be reviewed periodically to ensure the correct employees’ payroll is being charged to the grant and a review of equipment rental charges be made to determine the actual equipment in use by the department. Management’s response: The Township of Bloomfield, Department of Community Development, will initiate drawdowns based on actual expenditure activity as incurred on a regular basis and perform a review of salaries and other administrative costs to ensure all departmental expenses are being charged correctly.

Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22-12/31/22 Compliance/Internal Control over Compliance: Reporting Criteria or specific requirement: The Township of Bloomfield – Department of Community Development must submit the annual performance and evaluation report within 90 days after the end of the program year. Condition: The Department of Housing and Urban Development’s Annual Performance and Evaluation Report was not made available for audit. Questioned costs: None Context: During the course of our audit, we noted that the Township was required to prepare and submit the Annual Performance and Evaluation Report, however, upon request, some of the report was either not prepared and submitted or was simply not provided. Effect: The Township is not in compliance with federal requirements regarding reporting. Ineffective controls to monitor program requirements could result in inaccurate information, increase the risk of non-compliance, and expose the Township to the risk of loss of funding. Cause: The Township of Bloomfield – Department of Community Development did provide the Annual Performance and Evaluation Report. Recommendation: The Township of Bloomfield, Department of Community Development should implement policies and procedures to ensure all required reports are prepared and filed to ensure compliance with federal program requirements. Management’s response: The Township of Bloomfield, Department of Community Development will ensure that all required reporting requirements are met.

Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22 - 12/31/22 Compliance/Internal Control over Compliance: Reporting Criteria or specific requirement: The grantee must file the IDISC04PR29 Cash on Hand quarterly report on a timely basis. This report must be in agreement with the grantees reconciled cash balances. Condition: The Township’s IDISC04PR29 Cash on Hand Quarterly reports did not agree to the reconciled cash balances in the Community Development Trust Fund, and they were submitted late. Questioned costs: Undetermined Context: During the course of our audit, we noted that the Township had submitted the IDIS Cash on Hand Quarterly reports and they did not agree to the reconciled cash balances of the Townships CDBG Bank Account and they were submitted late.Effect: The Township is not in compliance with federal requirements regarding the reporting of cash on hand per the Compliance Supplement. Cause: The Township of Bloomfield is misreporting the applicable Cash on Hand. Recommendation: The Township takes more care to ensure that they are reporting the correct cash on hand dollar amounts, and that these reports are submitted on time. Management’s response: The Township of Bloomfield should establish policies to ensure that complete and accurate Cash on Hand reporting occurs.

Finding 2022-001 Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22 - 12/31/22 Compliance/Internal Control over Compliance: Cash Management Criteria or specific requirement: 2 CFR Part 200 Appendix XI Compliance Supplement, Section 3.2C. Cash management requires that program costs must be paid by the Township before reimbursement is requested from the Federal government. Also, interest earned in excess of $100 on grant advances held in an interest-bearing account must be remitted to the U.S. Treasury. Condition: The Township has requested expenditure reimbursements in IDIS for expenditures that were not made or, in the past, has requested draw downs in excess of documented expenditures. This has resulted in a substantial reconciled cash balance for which no identifiable purpose could be identified. Questioned costs: Undetermined Context: During our review of cash management and cash on hand reporting, we identified a substantial reconciled balance in the Township’s accounts which do not have an identifiable purpose. This is a result of the Township requesting reimbursement for expenditures that were either not actually incurred or for administrative expenses that were drawn down in excess of supporting documentation or for reimbursement of program costs that were not transferred out of the account. Effect: The Township has a substantial reconciled cash balance with no identifiable purpose. Interest is accumulating on grant advances in excess of $100 and not being remitted to the U.S. Treasury. Cause: Financial drawdown policies and procedures are lacking and/or inadequate. There has been a history of staff drawing down funds in excess of actual expenditures or drawing down grant allocations for expenses incurred by other programs and then not reimbursing the Township’s current budget for those eligible expenses. Drawdown procedures are not consistently performed as expenses are incurred. Recommendation: The Township’s drawdown policies and procedures be enhanced; that only actual supported expenditures be drawn down from the approved project. Detailed supporting documentation and expenditure records related to drawdowns for expenses incurred by the Township for CDBG Programs administered through its general budget be provided for auditor review and those drawdowns be remitted to the Township for reimbursement. Management’s response: The Township of Bloomfield should establish financial drawdown policies and provide training to its staff to ensure compliance with the cash management compliance requirements of the Community Development Block Grant Program. Steps have been taken to solicit approval from HUD to utilize the unallocated balance of funds in the Community Development Bank account for grant eligible projects.

Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22-12/31/22 Compliance/Internal Control over Compliance: Allowable Costs Criteria or specific requirement: Charges to federal awards for administrative related expenditures be supported by detailed documentation and eligible expenses should be charged to the applicable program year. Condition: There were equipment rental charges being posted to administration for which supporting documentation could not be provided. Withdrawals from the administrative grant allotments were not in agreement with charges incurred. Questioned costs: Undetermined Context: During our review of budgetary expenditures, we found that rental charges for equipment were not substantiated to actual equipment location. Administrative drawdowns through IDIS were also not in agreement with the actual budgetary expenditures resulting in an insufficient drawdown of approximately $65,527. Effect: Administrative expenditures are not accurately charged to administration nor are drawdowns through IDIS in agreement with actual expenditures. Cause: Drawdown procedures concerning administrative costs (payroll and other expenses) are not performed ratably as expenses are incurred; procedures are not in place to ensure the correct employees and corresponding salaries are being allocated correctly. Recommendation: Drawdowns through IDIS for payroll and other administrative charges be made as incurred; employee charges be reviewed periodically to ensure the correct employees’ payroll is being charged to the grant and a review of equipment rental charges be made to determine the actual equipment in use by the department. Management’s response: The Township of Bloomfield, Department of Community Development, will initiate drawdowns based on actual expenditure activity as incurred on a regular basis and perform a review of salaries and other administrative costs to ensure all departmental expenses are being charged correctly.

Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22-12/31/22 Compliance/Internal Control over Compliance: Reporting Criteria or specific requirement: The Township of Bloomfield – Department of Community Development must submit the annual performance and evaluation report within 90 days after the end of the program year. Condition: The Department of Housing and Urban Development’s Annual Performance and Evaluation Report was not made available for audit. Questioned costs: None Context: During the course of our audit, we noted that the Township was required to prepare and submit the Annual Performance and Evaluation Report, however, upon request, some of the report was either not prepared and submitted or was simply not provided. Effect: The Township is not in compliance with federal requirements regarding reporting. Ineffective controls to monitor program requirements could result in inaccurate information, increase the risk of non-compliance, and expose the Township to the risk of loss of funding. Cause: The Township of Bloomfield – Department of Community Development did provide the Annual Performance and Evaluation Report. Recommendation: The Township of Bloomfield, Department of Community Development should implement policies and procedures to ensure all required reports are prepared and filed to ensure compliance with federal program requirements. Management’s response: The Township of Bloomfield, Department of Community Development will ensure that all required reporting requirements are met.

Information on the federal program: Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22 - 12/31/22 Compliance/Internal Control over Compliance: Reporting Criteria or specific requirement: The grantee must file the IDISC04PR29 Cash on Hand quarterly report on a timely basis. This report must be in agreement with the grantees reconciled cash balances. Condition: The Township’s IDISC04PR29 Cash on Hand Quarterly reports did not agree to the reconciled cash balances in the Community Development Trust Fund, and they were submitted late. Questioned costs: Undetermined Context: During the course of our audit, we noted that the Township had submitted the IDIS Cash on Hand Quarterly reports and they did not agree to the reconciled cash balances of the Townships CDBG Bank Account and they were submitted late.Effect: The Township is not in compliance with federal requirements regarding the reporting of cash on hand per the Compliance Supplement. Cause: The Township of Bloomfield is misreporting the applicable Cash on Hand. Recommendation: The Township takes more care to ensure that they are reporting the correct cash on hand dollar amounts, and that these reports are submitted on time. Management’s response: The Township of Bloomfield should establish policies to ensure that complete and accurate Cash on Hand reporting occurs.