Finding Text
Condition: Management submitted documentation for federal reimbursements that was not valid. Checks were issued to the vendor by the City for the full amount of the vendor’s invoice. These checks along with the vendors invoice were submitted as proof of payment to request federal reimbursement. The check for the full amount of the vendor invoice was not sent to the vendor but were instead voided and then once the federal reimbursement payment of 75% of the invoice total was received the vendor was issued a check for the 75% with the understanding that the remaining 25% would be paid at a later date. Criteria: Requests for reimbursement are to include documentation of the full amount of the expenses paid to the vendor prior to submission for federal reimbursement. Cause: The City was experiencing cash shortages and used this method to receive federal funds in advance of the expenses being paid to the vendor. Effect: The City did not comply with the reimbursement requirements at the time of reimbursement requests were made. Recommendation: Management should secure funding prior to beginning a project and properly manage cash flows so that reimbursement requirements will be met.