Finding 575125 (2022-002)

Material Weakness Repeat Finding
Requirement
C
Questioned Costs
-
Year
2022
Accepted
2025-08-28
Audit: 365226
Organization: City of Davis (CA)

AI Summary

  • Core Issue: The City is delaying drawdown requests for CDBG funds, submitting them 4 to 22 months after expenditures, which risks non-compliance with federal regulations.
  • Impacted Requirements: Compliance with 24 CFR 570.902, which mandates timely submission of drawdown requests to match expenditures with revenues.
  • Recommended Follow-Up: The City should implement procedures to ensure drawdown requests are submitted at least quarterly to improve cash management.

Finding Text

Finding Reference Number: SA 2022-002 Cash Management AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: 24 CFR 570.902 indicates that the Department of Housing and Urban Development will review the performance of each entitlement, HUD-administered small cities, and Insular Areas recipient to determine whether each recipient is carrying out its CDBG-assisted activities in a timely manner. One of the factors in determining timeliness is the timing of the use of entitlement grant funds and the amount of undisbursed entitlement grant funds that remain in the Integrated Disbursement Information System (IDIS). Therefore, the City should submit drawdown requests in the IDIS system 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. Condition: During our testing of CDBG grant drawdown requests during fiscal year 2022, we noted that a drawdown made in September 2022 included December 2021, January 2022 and June 2022 expenditures, a drawdown made in November 2023 included December 2021, January 2022 and June 2022 expenditures, and a drawdown made in February 2022 included September 2021 expenditures. The City submitted the drawdown requests in the IDIS from four to twenty-two months after the program expenditures were incurred. Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of being out of compliance with the provisions of 24 CFR 570.902. Cause: We understand that the drawdowns were delayed due to staff turnover and also due to the extensive time it took for City staff to reconcile program expenditures to determine that all costs had been included on drawdowns. Identification as a Repeat Finding: Yes, since 2021 Recommendation: The City should develop procedures to ensure that drawdown requests are submitted more frequently, at least on a quarterly basis. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Corrective Action Plan

Finding Reference Number: SA 2022-002 Cash Management AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 • Fiscal Year of Initial Finding: 2021 • Name(s) of the contact person: Jennifer Block, Management Analyst • Corrective Action Plan: At the end of FY 2023, the City brought the program back in-house to the newly-created Department of Social Services and Housing (SSH). In FY 2024, staff developed a process to ensure timely and consistent draws, with reconciliation to the general ledger at the point of each draw. SSH staff have developed and implemented a timeline of required actions for the program to ensure compliance with deadlines. Staff performs drawdowns of CDBG funding through HUD's IDIS online system monthly. Staff will now report the quarterly drawdowns and reconciliation in the Funds Projected/ Funds Drawn spreadsheet to improve monitoring and identification of problems early. This will increase the speed by which Davis spends down its credit line, and reduce gaps in expenditure recording between IDIS and the City's financial management system. In addition, an updated draw-down process, paired with quarterly reconciliation and reporting through the quarterly cash transaction report, will help staff correctly draw entitlement funds. • Anticipated Completion Date: June 30, 2024

Categories

Cash Management HUD Housing Programs Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 575124 2022-001
    Material Weakness Repeat
  • 575126 2022-003
    Material Weakness Repeat
  • 575127 2022-004
    Material Weakness Repeat
  • 575128 2022-005
    Material Weakness
  • 575129 2022-006
    Material Weakness
  • 575130 2022-001
    Material Weakness Repeat
  • 575131 2022-002
    Material Weakness Repeat
  • 575132 2022-003
    Material Weakness Repeat
  • 575133 2022-004
    Material Weakness Repeat
  • 575134 2022-005
    Material Weakness
  • 575135 2022-006
    Material Weakness
  • 575136 2022-007
    Significant Deficiency
  • 575137 2022-008
    Significant Deficiency
  • 575138 2022-009
    Significant Deficiency
  • 575139 2022-009
    Significant Deficiency
  • 575140 2022-009
    Significant Deficiency
  • 1151566 2022-001
    Material Weakness Repeat
  • 1151567 2022-002
    Material Weakness Repeat
  • 1151568 2022-003
    Material Weakness Repeat
  • 1151569 2022-004
    Material Weakness Repeat
  • 1151570 2022-005
    Material Weakness
  • 1151571 2022-006
    Material Weakness
  • 1151572 2022-001
    Material Weakness Repeat
  • 1151573 2022-002
    Material Weakness Repeat
  • 1151574 2022-003
    Material Weakness Repeat
  • 1151575 2022-004
    Material Weakness Repeat
  • 1151576 2022-005
    Material Weakness
  • 1151577 2022-006
    Material Weakness
  • 1151578 2022-007
    Significant Deficiency
  • 1151579 2022-008
    Significant Deficiency
  • 1151580 2022-009
    Significant Deficiency
  • 1151581 2022-009
    Significant Deficiency
  • 1151582 2022-009
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $4.08M
20.507 Federal Transit Formula Grants $2.83M
20.205 Highway Planning and Construction $1.57M
20.526 Buses and Bus Facilities Formula, Competitive, and Low Or No Emissions Programs $1.06M
14.218 Community Development Block Grants/entitlement Grants $302,823
14.235 Supportive Housing Program $78,419
93.569 Community Services Block Grant $65,437
14.239 Home Investment Partnerships Program $50,355
97.029 Flood Mitigation Assistance $32,249
59.075 Shuttered Venue Operators Grant Program $9,361
15.904 Historic Preservation Fund Grants-in-Aid $5,000
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $2,112