Finding Text
Finding 2022-001
Information on the federal program:
Community Development Block Grant, CFDA #14.218, Grant Period 1/1/22 - 12/31/22
Compliance/Internal Control over Compliance: Cash Management
Criteria or specific requirement:
2 CFR Part 200 Appendix XI Compliance Supplement, Section 3.2C. Cash management requires that program costs must be paid by the Township before reimbursement is requested from the Federal government. Also, interest earned in excess of $100 on grant advances held in an interest-bearing account must be remitted to the U.S. Treasury.
Condition:
The Township has requested expenditure reimbursements in IDIS for expenditures that were not made or, in the past, has requested draw downs in excess of documented expenditures. This has resulted in a substantial reconciled cash balance for which no identifiable purpose could be identified.
Questioned costs:
Undetermined
Context:
During our review of cash management and cash on hand reporting, we identified a substantial reconciled balance in the Township’s accounts which do not have an identifiable purpose. This is a result of the Township requesting reimbursement for expenditures that were either not actually incurred or for administrative expenses that were drawn down in excess of supporting documentation or for reimbursement of program costs that were not transferred out of the account.
Effect:
The Township has a substantial reconciled cash balance with no identifiable purpose. Interest is accumulating on grant advances in excess of $100 and not being remitted to the U.S. Treasury.
Cause:
Financial drawdown policies and procedures are lacking and/or inadequate. There has been a history of staff drawing down funds in excess of actual expenditures or drawing down grant allocations for expenses incurred by other programs and then not reimbursing the Township’s current budget for those eligible expenses. Drawdown procedures are not consistently performed as expenses are incurred.
Recommendation:
The Township’s drawdown policies and procedures be enhanced; that only actual supported expenditures be drawn down from the approved project. Detailed supporting documentation and expenditure records related to drawdowns for expenses incurred by the Township for CDBG Programs administered through its general budget be provided for auditor review and those drawdowns be remitted to the Township for reimbursement.
Management’s response:
The Township of Bloomfield should establish financial drawdown policies and provide training to its staff to ensure compliance with the cash management compliance requirements of the Community Development Block Grant Program. Steps have been taken to solicit approval from HUD to utilize the unallocated balance of funds in the Community Development Bank account for grant eligible projects.