Finding Text
2022-006 ? 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-MC-06-0026, E-21-MC-06-0026, E-20-MW-06-0026 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to April 2022 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. b. 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 two out of nine samples selected for obligation testing were outside of the obligation without further justifications. In addition, we noted three out of forty 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 grantors for extensions nor document the exceptions. 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: Not applicable. 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 the finding.