Finding Text
Finding #SA2022-007: Cash Management
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The City should submit drawdown requests to San Joaquin County throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the County, unless specifically authorized by the grantor, and costs reported on the SEFA should be the same as those included in requests for reimbursement.
Condition: The City reported expenditures under the COVID-19 - CDBG-CV Program totaling $378,077 in fiscal year 2021. As noted in prior year finding SA2021-005, the City had not requested reimbursement for all of those costs during fiscal year 2021 or subsequent to fiscal year 2021. When we began our work on the fiscal year 2022 single audit, we noted that the COVID-19 - CDBG-CV Program was not included on the SEFA. The grant award was for $400,000 and we inquired about whether the remaining funding of $21,923 had been expended or reimbursed during the fiscal year 2022. In response to that question, City staff provided the grant drawdown information which totaled to $400,000, but only $40,200 of those costs had been included on the prior year SEFA. The remaining costs drawn down from the grant during fiscal year 2022 of $359,800 were different costs than were incurred during fiscal year 2021.
Effect: The City is not matching expenditures with associated grant revenues throughout the fiscal year as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the County. In addition, when the City reports costs on the SEFA that are different from the costs requested for reimbursement from the grantor, it not only misstates the SEFA, but it could also mean ineligible costs are reported.
Cause: We understand that the program is currently administrated by different departmental staff than the staff during fiscal year 2022 and staff turnover led to the late preparation of reimbursements and the inclusion of project expenditures on the reimbursement request that were different from those reported on the prior year SEFA.
Identification as a repeat finding: Yes, since 2021
Recommendation: The City must develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. In addition, City staff should ensure that program costs incurred are properly reported on the annual SEFA.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.