Finding Text
2024-002 PROGRAM INCOME – SIGNIFICANT DEFICIENCY Federal Program Community Development Block Grant-Entitlement/Special Purpose Grants Cluster ALN 14.218; passed through the County of Berks Criteria Per 2 CFR section 200.307(a), program income must be expended prior to requesting Federal Funds. The Authority receives program income under the above grants and must report the receipt and application of program income within the United States Department of Housing and Urban Development Integrated Disbursement and Information System (IDIS). Condition/Cause During our testing of program income received during 2024, it was noted that the Authority did properly report all program income received during the year into IDIS and applied all program income received towards expenditures by the end of the year. However, it was noted that there were two instances in which additional entitlement funds were drawn down before all available program income was applied to expenditures. The Authority utilizes a separate general ledger account in the financial reporting software to record all program income received for each federal grant program. The Fiscal Officer enters the program income into IDIS. No internal control existed to ensure the completeness or accuracy of the program income information entered into IDIS and to ensure all available program income was applied before drawing down entitlement funding. Effect Due to the lack of internal controls requiring the review of drawdowns, additional entitlement funding was drawn down twice during the year before all available program income was applied in the IDIS system. Questioned Costs None Context The entire population of program income received as reported in the reconciled grant-specific program income general ledger account was reviewed. The timing of the cash receipts was compared to the timing of the entitlement draws made in the IDIS system to determine if all available program income was applied to expenditures before new entitlement draws were made. Repeat Finding Yes; 2023-002 Recommendation We recommend the Authority develop and implement an internal control procedure to ensure that all program income is entered timely within the IDIS system. Prior to drawing down new entitlement funding, the program income general ledger account associated with the grant program should be reviewed and compared to the program income reported within IDIS to ensure all program income is recorded and fully utilized before drawing down additional entitlement funding. Management Response The Authority implemented a new policy to track and document program income: a. Upon receipt of program income, it shall be entered individually into IDIS and assigned to an activity or activities within fifteen (15) calendar days of receipt. b. At the next request for funds for an activity which includes funding from program income, program income shall be used prior to requesting federal funds for the activity. c. The request for federal funds shall be prepared by the Fiscal Officer and reviewed by one of the Assistant Fiscal Officers to determine if program income is being used prior to the request of federal funds. d. If it has been determined and documented that program income is being used prior to the request for federal funds, the request shall be forwarded to the Executive Director for approval. This finding has since been resolved in 2025, with a new policy developed and implemented on April 1, 2025.