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Federal Program Information: Assistance Listing Number (ALN): 14.251 Federal Program Name: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Federal Agency: U.S. Department of Housing and Urban Development Passed-through Entity: Not applicable Federal Award Number: B-23-CP-CA-0189 Federal Award Year: 12/29/2022 - 8/31/2031 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria or Specific Requirements: Pursuant to 2 CFR 200.403, Factors affecting allowability, and 200.405, Allocable costs, costs charged to a federal award must be allowable and allocable generally. A cost is allocable to a federal award or other cost objective if the cost is assignable to that federal award or other cost objective in accordance with the relative benefits received. A cost may not be claimed for reimbursement multiple times under the same or different funding sources. Condition: During our audit, we noted that certain expenditures totaling $54,799 were claimed for reimbursement twice. Questioned Costs: $54,799 Cause: LYRIC did not have adequate review and monitoring procedures in place to verify that expenditures included in reimbursement requests had not been previously claimed and reimbursed. Effect: Federal funds were overdrawn, resulting in questioned costs and noncompliance with federal requirements. Recommendation: We recommend that management strengthen internal controls over the reimbursement process to ensure that expenditures charged to federal awards are reviewed for accuracy, completeness, and not duplicated prior to submission. Controls should include maintaining a detailed tracking log of all reimbursement requests, performing independent reviews and reconciliations of claims to supporting documentation, and implementing a system or procedures to detect and prevent duplicate reimbursement requests. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding and treats accurate reimbursement of federal funds as a serious obligation. LYRIC will implement the following corrective actions: (1) create and maintain a detailed reimbursement tracking log recording each submitted draw by expense date, vendor, amount, and draw number, to be updated at the time of every submission; (2) require a second staff member to perform an independent review of each reimbursement request against the tracking log and general ledger prior to submission, specifically to identify potential duplicate charges or wrong coding of expenses; (3) work with HUD to address the $54,799 in duplicated amount to offset other legitimate expenses; and (4) explore whether LYRIC's accounting system can be configured to flag expenditures already coded to a prior reimbursement request, adding a system-level check to the manual review process. Responsible Official and Position: Ana Rubio, Director of Finance, and Laura Chavez, Contracts Manager Expected Implementation Date: July 1, 2026