Finding Text
2022-007 (Repeat Finding) ALN: 93.568 LIHEAP/COVID-19 LIHEAP - Cash Management, Passthrough from Massachusetts Department of Housing and Community Development Condition: Management drawdowns of LIHEAP grant funds exceeded LIHEAP grant expenses during the fiscal year. Cause: There are two causes. First, management?s routine grant drawdowns include more funds than needed for the LIHEAP program for incidentals and anticipated future costs. Therefore some of these LIHEAP drawdowns were not completely disbursed and $1,915,052 remains in deferred revenue at June 30, 2022. Second, a substantial portion of the COVID-19 LIHEAP ARPA grant was for Supplemental Benefits to prior year program participants. A drawdown of $11,675,500 was deposited to NEFWC?s deposit account by Massachusetts DHCD in advance of the calculation and payment of client benefits related to these funds. The cash request was prepared and submitted by NEFWC on September 29, 2021 and approved by Massachusetts DHCD on September 29, 2021, and the receipt of funds by NEFWC was dated October 7, 2021. The calculation of the benefit amounts and recipients was subsequently performed by Massachusetts DHCD and NEFWC?s payment of the client benefits, totaling $9,567,374, was paid on a check run dated November 1, 2021. As a result, the check run was $2,108,126 less than the advance cash receipt resulting in excess LIHEAP funds on-hand (deferred revenue). The total of these two causes is a deferred LIHEAP revenue balance at June 30, 2022 of $3,815,684. Criteria: Grant drawdowns should be made on a cost reimbursement basis and disbursed in accordance with cash management principles. Effect of Potential Effect: Management did not comply with cash management principles and as a result has deferred LIHEAP revenue of $3,815,684 at June 30, 2022. Recommendation: We recommend that management follow cash management principles and only draw down funds sufficient to reimburse actual expenditures. If excess funds are received they should be returned or accounted for in a subsequent funds request. Views of Responsible Officials: Management agrees with the finding, see Corrective Action Plan.