Finding Text
2023-006 – Special Tests and Provisions – Internal Control and Compliance over Obligation, Expenditure,
Payment Requirements
Identification of the Federal Program:
Assistance Listing Number: 14.231
Assistance Listing Title: Emergency Solutions Grant Program
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Pursuant to May 2023 Compliance Supplement, Special Tests and Provisions – Obligation, Expenditures and
Payment Requirements –
Obligation-ESG. Funds allocated to metropolitan cities, urban counties, and territories. Within 180 days after the
date that HUD signs the grant agreement (or a grant amendment for reallocation of funds) with a metropolitan
city, urban county, or territory, the recipient must obligate all of the grant amount, except the amount for its
administrative costs.
ESG-CV funds must be obligated by the recipient in accordance with 24 CFR 576.203(a)(1) and (2), except as
provided below. The applicable period for obligating ESG-CV funds begins on the date HUD signed the
recipient’s grant agreement for the first allocation of ESG-CV funds. The obligation deadlines below apply to the
both the first and second allocation of ESG-CV funds. HUD is also providing further flexibility for recipients
(including states and non-states) to provide additional time to identify entities that have capacity and expertise to
mitigate the impacts of coronavirus, including those who have not previously or recently received ESG funding.
a. Recipients that are metropolitan cities, urban counties, or territories may have up to 240 days from the
date HUD signs the grant agreement to obligate ESG-CV funds. Recipients must maintain in their
program records a description of any changes the recipient implemented to identify and select new
subrecipients.
Payments to Subrecipients. The recipient 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 our audit, we noted that the ESG Grant Fund obligated to sub-recipients under obligation testing were
outside of the obligation timeframe of 180 days in case of ESG and 240 days in case of ESG CV without further
justifications.
In addition, we noted two (2) out of seven (7) samples selected for payment requirements testing were outside of
30 days window without further justifications.
Cause: The City does not have formal policies and procedures in place to obligate the funds within the required
timeframe nor complete the subrecipient’s payment request within 30 days. In addition, the City did not have
procedures in place to timely request grantor extensions and/or document exceptions that are outside of uniform
guidance.
Effect or Potential Effect:
The exceptions noted resulted in noncompliance.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2022-006.
Recommendation:
We recommended the City establish internal control procedures to monitor compliance requirements to ensure the
subrecipient’s payment requests are processed timely.
Views of Responsible Officials:
Management concurs with the finding.