Finding 1061635 (2023-006)

Significant Deficiency Repeat Finding
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-08-27
Audit: 318000
Organization: City of Stockton (CA)

AI Summary

  • Core Issue: The City failed to obligate ESG funds within the required 180 or 240 days and did not process subrecipient payments within 30 days.
  • Impacted Requirements: Noncompliance with federal regulations regarding fund obligations and payment timelines, as outlined in the May 2023 Compliance Supplement.
  • Recommended Follow-Up: Establish formal internal control procedures to ensure timely fund obligations and payment processing for subrecipients.

Finding Text

2023-006 – Special Tests and Provisions – Internal Control and Compliance over Obligation, Expenditure, Payment Requirements Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to May 2023 Compliance Supplement, Special Tests and Provisions – Obligation, Expenditures and Payment Requirements – Obligation-ESG. Funds allocated to metropolitan cities, urban counties, and territories. Within 180 days after the date that HUD signs the grant agreement (or a grant amendment for reallocation of funds) with a metropolitan city, urban county, or territory, the recipient must obligate all of the grant amount, except the amount for its administrative costs. ESG-CV funds must be obligated by the recipient in accordance with 24 CFR 576.203(a)(1) and (2), except as provided below. The applicable period for obligating ESG-CV funds begins on the date HUD signed the recipient’s grant agreement for the first allocation of ESG-CV funds. The obligation deadlines below apply to the both the first and second allocation of ESG-CV funds. HUD is also providing further flexibility for recipients (including states and non-states) to provide additional time to identify entities that have capacity and expertise to mitigate the impacts of coronavirus, including those who have not previously or recently received ESG funding. a. Recipients that are metropolitan cities, urban counties, or territories may have up to 240 days from the date HUD signs the grant agreement to obligate ESG-CV funds. Recipients must maintain in their program records a description of any changes the recipient implemented to identify and select new subrecipients. Payments to Subrecipients. The recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient’s complete payment request. This requirement also applies to each subrecipient that is a unit of general-purpose local government (24 CFR section 576.203). Condition: During our audit, we noted that the ESG Grant Fund obligated to sub-recipients under obligation testing were outside of the obligation timeframe of 180 days in case of ESG and 240 days in case of ESG CV without further justifications. In addition, we noted two (2) out of seven (7) samples selected for payment requirements testing were outside of 30 days window without further justifications. Cause: The City does not have formal policies and procedures in place to obligate the funds within the required timeframe nor complete the subrecipient’s payment request within 30 days. In addition, the City did not have procedures in place to timely request grantor extensions and/or document exceptions that are outside of uniform guidance. Effect or Potential Effect: The exceptions noted resulted in noncompliance. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Yes. See prior year finding 2022-006. Recommendation: We recommended the City establish internal control procedures to monitor compliance requirements to ensure the subrecipient’s payment requests are processed timely. Views of Responsible Officials: Management concurs with the finding.

Categories

Subrecipient Monitoring Allowable Costs / Cost Principles Special Tests & Provisions

Other Findings in this Audit

  • 485187 2023-003
    Significant Deficiency
  • 485188 2023-003
    Significant Deficiency
  • 485189 2023-003
    Significant Deficiency
  • 485190 2023-003
    Significant Deficiency
  • 485191 2023-005
    Significant Deficiency
  • 485192 2023-003
    Significant Deficiency
  • 485193 2023-006
    Significant Deficiency Repeat
  • 485194 2023-003
    Significant Deficiency
  • 485195 2023-006
    Significant Deficiency Repeat
  • 485196 2023-003
    Significant Deficiency
  • 485197 2023-006
    Significant Deficiency Repeat
  • 485198 2023-004
    Material Weakness Repeat
  • 485199 2023-004
    Material Weakness Repeat
  • 485200 2023-004
    Material Weakness Repeat
  • 1061629 2023-003
    Significant Deficiency
  • 1061630 2023-003
    Significant Deficiency
  • 1061631 2023-003
    Significant Deficiency
  • 1061632 2023-003
    Significant Deficiency
  • 1061633 2023-005
    Significant Deficiency
  • 1061634 2023-003
    Significant Deficiency
  • 1061636 2023-003
    Significant Deficiency
  • 1061637 2023-006
    Significant Deficiency Repeat
  • 1061638 2023-003
    Significant Deficiency
  • 1061639 2023-006
    Significant Deficiency Repeat
  • 1061640 2023-004
    Material Weakness Repeat
  • 1061641 2023-004
    Material Weakness Repeat
  • 1061642 2023-004
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
66.958 Water Infrastructure Finance and Innovation (wifia) (e) $108.00M
21.019 Coronavirus Relief Fund $2.78M
21.027 Coronavirus State and Local Fiscal Recovery Funds $2.25M
97.083 Staffing for Adequate Fire and Emergency Response (safer) $1.37M
14.231 Emergency Solutions Grant Program $889,971
16.753 Congressionally Recommended Awards $410,914
66.818 Brownfields Assessment and Cleanup Cooperative Agreements $186,954
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $163,683
21.023 Emergency Rental Assistance Program $157,845
20.600 State and Community Highway Safety $139,917
14.239 Home Investment Partnerships Program $43,873
16.034 Coronavirus Emergency Supplemental Funding Program $42,348
16.123 Community-Based Violence Prevention Program $31,683
16.738 Edward Byrne Memorial Justice Assistance Grant Program $16,840
97.044 Assistance to Firefighters Grant $13,899
14.218 Community Development Block Grants/entitlement Grants $1,007
20.205 Highway Planning and Construction $495
59.059 Congrssional Earmarks Initiative $283