Finding 32204 (2022-001)

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 2022-001 (repeat finding of 2021-002) Youth Homelessness Demonstration Program, CFDA #14.276 Condition and Criteria: According to 2 CFR Section 200.305(b)(3) all reimbursement requests should be based on supporting documentation that shows the cost was incurred before the request for payment and that the payment to vendor was made. All the cash drawdown reports did not have adequate supporting documentation for the drawdown request. Cause: The reason for the lack of support in the drawdowns is due to using budgeted or estimated grant amounts as a basis for the request instead of actual expenses. Effect: The effect is that the Organization could have either requested funds before actual expenses and not be in compliance with the cash management requirements under Uniform Grant Guidance or the Organization could be shorting themselves funds during the grant period and causing cash flow issues. Context: In reviewing all the cash drawdown requests, we could not find the supporting documentation to support the expense was incurred before the drawdown request. We also could not determine that the cash payment was made to the vendor before the Organization requested it from the vendor. Auditor?s Recommendation: We recommend that each reimbursement request agrees to what is allocated through the accounting system by grant or program for actual expenses. This will help support the request and, if needed, a method to provide the actual invoice for the expense being requested. Management response: This is now our policy. Each grant program has its own identifiable ?cost center? that both revenue and expenses are posted in our accounting system.