FAC Explorer

Finding 38089 (2022-002)

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Requirement
J
Questioned Costs
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Year
2022
Accepted
2023-03-29
Audit: 32485
Organization: City of Yreka (CA)
Auditor: Smith & Newell CPAS

AI Summary

  • Core Issue: Loan monitoring for CDBG recipients was inadequate, lacking verification of homeownership and occupancy for the 2021-2022 fiscal year.
  • Impacted Requirements: Recipients must own and reside in homes funded by CDBG loans, but documentation to confirm this was missing.
  • Recommended Follow-Up: The City should establish formal loan monitoring policies and ensure annual documentation is maintained to comply with loan agreements.

Finding Text

Name: Community Development Block Grant/State?s Program and Non-Entitlement Grants in Hawaii CFDA #: 14.228 Federal Grantor: U.S. Department of Housing and Urban Development Pass Through Entity: State Department of Housing and Community Development Award No.: Various Year: 2021/2022 Compliance Requirement: Program Income Criteria The loan documents require that recipients of CDBG loans continue to own and reside in their homes that were acquired using CDBG funding. Condition During our test of loan monitoring procedures, we noted that all of the loans tested did not include verification documentation regarding loan recipients were the homeowners during the 2021-2022 fiscal year. We also noted verification that the loan recipients occupied the homes obtained with CDBG funding was missing. We noted one of the loan recipients did not have proof of fire and flood insurance on file. Cause The City did not have formalized loan monitoring policies and procedures in place to ensure that loans were monitored on an annual basis in accordance with the loan agreements. Effect Information was not available to determine if the loan recipients were in compliance with the requirements of their loan agreements. Questioned Cost No questioned costs were identified as a result of our procedures. Context Not applicable. Repeat Finding This is not a repeat finding. Recommendation We recommend that the City develop and maintain policies and procedures regarding loan monitoring and ensure that all documentation of loan monitoring be maintained on an annual basis. Views of Responsible Officials and Planned Corrective Action Refer to separate Management?s Corrective Action Plan for views of responsible officials and management?s responses.

Corrective Action Plan

2022-002 Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii We recommend that the City develop and maintain policies and procedures regarding loan monitoring and ensure that all documentation of loan monitoring be maintained on an annual basis. Management?s Response: Finance was unaware of the need to have current utility bills included with the files. Responsible Individual: It is the Finance Director?s, Emily Aldrich, responsibility to ensure that all loan files are complete and accurate. Corrective Action Plan: An annual checklist has been added to each loan file to ensure that all proper documentation is included. Anticipated Completion Date: March 31, 2023 ? all files will be updated with the necessary checklist and appropriate documentation.

Categories

Subrecipient Monitoring Matching / Level of Effort / Earmarking Program Income

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
10.760 Water and Waste Disposal Systems for Rural Communities $5.07M
21.027 Coronavirus State and Local Fiscal Recovery Funds $489,431
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $388,002
66.818 Brownfields Assessment and Cleanup Cooperative Agreements $102,134
11.307 Economic Adjustment Assistance $10,620