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.