Finding 386627 (2021-001)

Material Weakness
Requirement
A
Questioned Costs
$1
Year
2021
Accepted
2024-03-27
Audit: 298952
Organization: City of Huntington Park (CA)

AI Summary

  • Core Issue: The City reported expenditures from the Coronavirus Relief Fund (CRF) that were also claimed under the Community Development Block Grant (CDBG), violating federal guidelines.
  • Impacted Requirements: Compliance with OMB 2 CFR Part 200 prohibits claiming the same costs from multiple funding sources, risking repayment and penalties.
  • Recommended Follow-Up: The City should implement strict review procedures to prevent double counting of costs across federal grants and ensure staff training on compliance.

Finding Text

2021-001 – Claimed CRF Expenditures Also Claimed from CDBG (NC/MW) Federal Program Title: Coronavirus Relief Fund Federal Catalog Number: 20.019 Federal Agency: U.S. Department of Treasury Category of Finding: Activities Allowed or Unallowed/ Allowable Costs/Cost Principles Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance Supplement July 2021 Part 4 20.019 Coronavirus Relief Fund (page 21.019-4), recipients may not use payments from the fund to cover expenditures for which they will receive reimbursement from other sources. Condition: During our audit, we noted that certain expenditures reported as CRF expenditures were also reported as CDBG expenditures. Cause: Lack of appropriate control over review and approval of allowable costs. Effect or Potential Effect: The City may have received reimbursement for the same costs from two different sources. This may result in repayment of funds already received and spent. In addition, noncompliance may result in reduction in future payments or funding amounts, imposed fines and penalties, or termination of the grant. More often than not, noncompliance may also result in reputational damage, special status for oversight and reviews, need for corrective action plan, and/or suspension or debarment. Questioned Cost: $95,500. Context: We selected 25 invoiced, non-payroll expenditures from a detailed listing provided by the City. Out of 25 items, we noted 10 items totaling $40,500 were also emergency housing or business assistance related to CDBG program. Upon review of the detailed listing, we found a total of $95,500 expenditures related to CDBG emergency housing or business assistance. Statistical Sampling Validity: Yes Repeat of a Prior-Year Finding: No Recommendation: We recommend that the City should thoroughly review all expenditures charged to federal grants to ensure that any cost claimed for one grant is not also claimed in another. The City should establish procedures to avoid double counting of allowable costs. Management Response and Corrective Action Plan: City’s Response: The City concurs with the finding. Staff responsible for this control during FY 2021 are no longer employed by the City. Corrective Action Plan: CDBG staff worked with program auditors to resolve the issues. Finance Staff and related CDBG staff have been trained to ensure there is not duplication of expenditures in multiple programs. In addition, the City has hired third-party consultants to provide guidance and oversight.

Corrective Action Plan

Management Response and Corrective Action Plan: City’s Response: The City concurs with the finding. Staff responsible for this control during FY 2021 are no longer employed by the City. Corrective Action Plan: CDBG staff worked with program auditors to resolve the issues. Finance Staff and related CDBG staff have been trained to ensure there is not duplication of expenditures in multiple programs. In addition, the City has hired third-party consultants to provide guidance and oversight. Planned Implementation Date: started in Q4 of FY 2023 Responsible Person: Finance Staff and CDBG Staff

Categories

Questioned Costs Procurement, Suspension & Debarment Allowable Costs / Cost Principles Cash Management

Other Findings in this Audit

  • 386625 2021-002
    Significant Deficiency
  • 386626 2021-003
    Significant Deficiency
  • 963067 2021-002
    Significant Deficiency
  • 963068 2021-003
    Significant Deficiency
  • 963069 2021-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.218 Community Development Block Grants/entitlement Grants $493,144
16.922 Equitable Sharing Program $286,339
21.019 Coronavirus Relief Fund $242,446
14.239 Home Investment Partnerships Program $38,154
20.600 State and Community Highway Safety $31,532
16.738 Edward Byrne Memorial Justice Assistance Grant Program $18,758
16.607 Bulletproof Vest Partnership Program $4,583