Finding 504517 (2023-003)

Significant Deficiency Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2024-11-04

AI Summary

  • Core Issue: We found errors in grant management, including incorrect award calculations, duplicated disbursements, and data inaccuracies in the system.
  • Impacted Requirements: The Bank did not consistently follow its own policies for underwriting, benefit duplication, expenditure review, and closeout procedures.
  • Recommended Follow-Up: Management should review and strengthen compliance with existing policies to prevent future discrepancies and ensure accurate grant management.

Finding Text

We performed different audit testing to validate compliance with the Terms and Conditions that the Bank as Subrecipient shall comply with applicable Puerto Rico Department of Housing’s policies and guidelines. From a total of 1,600 SBF Program Recovery Grants (the grants) awarded to business applicants during the year ended June 30, 2023, in the amount of $80,195,314, we performed a grant award test to validate various compliance requirements for the grant. We selected a sample of sixty-one (61) grants awarded as follows: eighteen (18) awarded for working capital purposes, thirty-four (34) awarded for working capital and equipment and nine (9) grants awarded for the purchase of equipment, in the total amount of $2,896,504. In addition, we performed a closeout test to validate procedures surrounding expenditure review and closeout of the grant. We selected a sample of sixty-one (61) cases, in the total amount of $2,942,184 from a total of 317 grants awarded amounting to $15,294,128 for which closeout procedures were completed during the year ended June 30, 2023. We noted the following: Amount Awarded Computed Incorrectly, Duplicated Grant Disbursements and Incorrect Data in Grant Management System of Record for the Grants. Management has not consistently applied procedures as described in the Bank’s policies for underwriting, duplication of benefits, expenditure review and closeout.

Corrective Action Plan

Management agrees with this finding. All resources that work the CDBG-DR Small Business Financing (SBF) project have been trained to perform their role according to the Program Guidelines, SOP's and regulations. The cases identified with deficiencies, as part of the Single Audit 2023 in the Intake, Underwriting and Expenditure Review & Closeout stages will be used as examples to prevent this situation from occurring in future cases and establish additional Team Lead quality control (QC). Additionally, recapture (repayment by the Grantee of any Grant amount received) of awarded and disbursed funds will apply when there's failure to comply with the SBF Program Guidelines.

Categories

Procurement, Suspension & Debarment Subrecipient Monitoring Equipment & Real Property Management

Other Findings in this Audit

  • 504516 2023-002
    Material Weakness Repeat
  • 504518 2023-004
    Significant Deficiency Repeat
  • 504519 2023-005
    Significant Deficiency
  • 504520 2023-006
    Material Weakness Repeat
  • 504521 2023-007
    Significant Deficiency Repeat
  • 1080958 2023-002
    Material Weakness Repeat
  • 1080959 2023-003
    Significant Deficiency Repeat
  • 1080960 2023-004
    Significant Deficiency Repeat
  • 1080961 2023-005
    Significant Deficiency
  • 1080962 2023-006
    Material Weakness Repeat
  • 1080963 2023-007
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $82.69M