Finding 48048 (2022-002)

Criteria: The recipient of federal awards must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient?s complete payment request. This requirement also applies to each subrecipient that is a unit of general-purpose local government (24 CFR section 576.203) Condition: During the course of the audit, we noted multiple instances of disbursements to subrecipients of the Emergency Solutions Grant Program were issued after 30 days. During the sampling of 17 disbursements, 2 exceeded the 30 day window. Context: The organization manages the Emergency Solutions Grant on behalf of the US Department of Housing and Urban Development (HUD). With the funds granted from HUD, the organization decided the best way to meet the needs of the community was to subaward the program's funds to multiple non-profit organizations in the community. Over the course of the fiscal year, the organization issued 164 disbursements to multiple non-profits from this federal program. The auditor sampled 17 of the disbursements with 2 of those disbursements not being sent to the requesting agency within the 30 days. Cause The organization lacked the staffing to process all invoices within the 30 day window. Effect: Compliance with 24 CFR Section 576.203 was not followed. Extrapolating the error rate of 2/17. We can estimate that 19 disbursements were late in the fiscal year. Since this is a reimbursement grant for the subrecipients, the non-profits had spent the funds and were waiting to be made whole from the program. Recommendations: Management should implement procedures to ensure timely reimbursements to subrecipients. Management Views: Management agrees with the finding and has a corrective action plan to resolve those internal control issues in the next fiscal year.