FAC Explorer

Finding 498458 (2023-007)

Material Weakness Repeat Finding
Requirement
J
Questioned Costs
$1
Year
2023
Accepted
2024-09-26
Audit: 321162
Organization: City of Baton Rouge - Parish of East Baton Rouge (LA)
Auditor: Eisneramper

AI Summary

  • Core Issue: The City-Parish is not effectively tracking and accounting for all program income from HOME loans, leading to a discrepancy of $282,534.
  • Impacted Requirements: Program income must be accurately recorded and recycled back into the HOME program, as per HUD guidelines.
  • Recommended Follow-Up: The City-Parish should reconcile loan balances with collection reports and general ledger entries to ensure all income is accounted for and address any discrepancies.

Finding Text

Program Income Questioned Costs: $282,534 Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish’s primary HOME activities is the lending of funds for development of low-moderate income housing, single family home purchases and other purposes. These “soft secondary” loans are to be repaid in varying amounts and points-in time, depending on the development’s viability or borrowers’ ability to repay The City-Parish’s loan accounting process does not effectively demonstrate and ensure that all loan payments due and those collected were accounted for as program income. This is a repeat of finding 2022-011 in our prior year report. Universe/ Population: The City-Parish’s outsourced loan servicing company’s reports at year-end were compared to the program income in general ledger accounting records for the year. The reduction in the loan balances from 2022 to 2023 was $801,636 while program income shown as collected in the accounting records was $519,102, leaving an unaccounted-for difference of $282,534. Effect: The City-Parish may not be collecting all program income to which it is entitled which could result in fewer dollars for the program. Cause: The administration of the City-Parish’s HOME Program was in transition during 2023. Recommendation: To ensure completeness of loan collections received, the City-Parish should reconcile the change in loan balances to collection reports produced by the loan servicer and to program income in the general ledger. Overages and shortages should be thoroughly pursued View of Responsible Officials: The Office of Community Development utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD by the loan service agency monthly for staff approval. The OCD staff then reconciles this income monthly and submits the monthly report to the Finance Department for processing. Loan balances are not only altered by program income but also through loan forgiveness offered to low-to-moderate income residents. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD before being executed by the Parish Attorney’s Office to provide multiple layers of review. Case files are maintained at the OCD and documentation of monthly reconciling has been provided along with an accounting ledger. The OCD is working to improve monthly reconciling templates to include incurred fees from the loan servicing agency as well as forgiveness events to provide an accurate gross revenue

Corrective Action Plan

Management’s response and corrective action is as follows: The Office of Community Development utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD by the loan service agency monthly for staff approval. The OCD staff then reconciles this income monthly and submits the monthly report to the Finance Department for processing. Loan balances are not only altered by program income but also through loan forgiveness offered to low-to-moderate income residents. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD before being executed by the Parish Attorney’s Office to provide multiple layers of review. Case files are maintained at the OCD and documentation of monthly reconciling has been provided along with an accounting ledger. The OCD is working to improve monthly reconciling templates to include incurred fees from the loan servicing agency as well as forgiveness events to provide an accurate gross revenue. Expected Implementation Date: June 2024 Contact person: Marlee Pittman Miller, Director, Mayor-President’s Office of Community Development

Categories

Questioned Costs Procurement, Suspension & Debarment Matching / Level of Effort / Earmarking Program Income

Other Findings in this Audit

  • 498454 2023-003
    - Repeat
  • 498455 2023-004
    Significant Deficiency
  • 498456 2023-005
    Significant Deficiency
  • 498457 2023-006
    Significant Deficiency
  • 498459 2023-008
    Material Weakness Repeat
  • 498460 2023-009
    Significant Deficiency
  • 498461 2023-009
    Significant Deficiency
  • 498462 2023-009
    Significant Deficiency
  • 498463 2023-010
    Significant Deficiency
  • 498464 2023-010
    Significant Deficiency
  • 498465 2023-010
    Significant Deficiency
  • 1074896 2023-003
    - Repeat
  • 1074897 2023-004
    Significant Deficiency
  • 1074898 2023-005
    Significant Deficiency
  • 1074899 2023-006
    Significant Deficiency
  • 1074900 2023-007
    Material Weakness Repeat
  • 1074901 2023-008
    Material Weakness Repeat
  • 1074902 2023-009
    Significant Deficiency
  • 1074903 2023-009
    Significant Deficiency
  • 1074904 2023-009
    Significant Deficiency
  • 1074905 2023-010
    Significant Deficiency
  • 1074906 2023-010
    Significant Deficiency
  • 1074907 2023-010
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $42.80M
21.023 Emergency Rental Assistance Program $9.04M
20.205 Highway Planning and Construction $7.79M
20.106 Airport Improvement Program, Covid-19 Airports Programs, and Infrastructure Investment and Jobs Act Programs $7.43M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $5.22M
97.039 Hazard Mitigation Grant $5.18M
97.029 Flood Mitigation Assistance $5.12M
93.914 Hiv Emergency Relief Project Grants $5.04M
93.686 Ending the Hiv Epidemic: A Plan for America � Ryan White Hiv/aids Program Parts A and B $1.97M
93.137 Community Programs to Improve Minority Health Grant Program $1.92M
17.259 Wioa Youth Activities $1.70M
93.569 Community Services Block Grant $1.38M
17.278 Wioa Dislocated Worker Formula Grants $1.19M
20.930 Payments for Small Community Air Service Development $1.00M
14.231 Emergency Solutions Grant Program $972,687
17.258 Wioa Adult Program $904,123
93.600 Head Start $674,944
10.558 Child and Adult Care Food Program $661,662
20.600 State and Community Highway Safety $639,142
14.218 Community Development Block Grants/entitlement Grants $573,380
97.067 Homeland Security Grant Program $350,265
14.239 Home Investment Partnerships Program $137,394
95.001 High Intensity Drug Trafficking Areas Program $120,643
93.658 Foster Care Title IV-E $103,567
20.607 Alcohol Open Container Requirements $86,780
20.616 National Priority Safety Programs $82,655
16.609 Project Safe Neighborhoods $75,354
93.568 Low-Income Home Energy Assistance $73,314
93.493 Congressional Directives $63,633
97.042 Emergency Management Performance Grants $61,405
97.024 Emergency Food and Shelter National Board Program $57,923
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $26,525
16.738 Edward Byrne Memorial Justice Assistance Grant Program $19,352
14.905 Lead Hazard Reduction Demonstration Grant Program $18,255
15.904 Historic Preservation Fund Grants-in-Aid $13,000
16.034 Coronavirus Emergency Supplemental Funding Program $7,205
21.009 Volunteer Income Tax Assistance (vita) Matching Grant Program $6,688
93.069 Public Health Emergency Preparedness $5,397
14.241 Housing Opportunities for Persons with Aids $1,995
66.818 Brownfields Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements $1,947
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $334
17.277 Wioa National Dislocated Worker Grants / Wia National Emergency Grants $-90