Finding 588819 (2022-001)

Material Weakness
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2023-04-26
Audit: 16768
Organization: City of Corpus Christi, Texas (TX)
Auditor: Weaver

AI Summary

  • Core Issue: The City improperly funded two ineligible code enforcement activities using CDBG grants, leading to questioned costs of $247,429.
  • Impacted Requirements: Compliance with 24 CFR 570.202, which specifies allowable costs for code enforcement activities, was not met.
  • Recommended Follow-Up: City officials should collaborate with HUD to clarify demolition costs and ensure all expenditures align with grant requirements.

Finding Text

Section 3. Federal and State Award Findings and Questioned Costs Finding 2022-001 Information on Federal Program: Federal Program: CDBG Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development (HUD) Assistance Listing: 14.218 Compliance Requirements: Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance and Noncompliance (Questioned Costs over $25,000 for a Major Program) Criteria: 24 CFR 570.202 (c) ? 570.202 Code Enforcement, allows costs incurred for inspection for code violations and enforcement of codes (e.g., salaries and related expenses of code enforcement inspectors and legal proceedings, but not including the cost of correcting the violations) in deteriorating or deteriorated areas when such enforcement together with public or private improvements, rehabilitation, or services to be provided may be expected to arrest the decline of the area. Condition: A HUD review of the City?s FY2021 CDBG-funded activities on the CDBG Summary Activity Report showed the City funded two ineligible Code Enforcement activities. Both activities included the expenditure of funds to correct code enforcement violations. Cause: City staff did not correctly identify these code enforcement activities as ineligible under the CDBG regulations. Effect or Potential Effect: By not appropriately reviewing the CDBG regulations and guidance to determine whether activity eligibility requirements were met, the City has used federal funds for ineligible activities which has resulted in required repayment of funds from non-federal sources. Context: Of the approximately $3.3 million reported as grant expenditures in fiscal year 2021, $0.2 million were disallowed. Questioned Costs: $247,429 Recommendation: We recommend City officials work with HUD to determine the nature of demolition costs and ensure all demolition costs are being appropriately expended under the grant agreement and ensure costs reported through the Consolidated Annual Performance Evaluation Report have the correct IDIS numbers. Views of Responsible Official(s) and Planned Corrective Action: See corrective action plan

Categories

Questioned Costs Allowable Costs / Cost Principles Eligibility HUD Housing Programs Material Weakness Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 12377 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
21.023 Emergency Rental Assistance Program $15.60M
20.106 Airport Improvement Program $14.16M
21.027 Coronavirus State and Local Fiscal Recovery Funds $8.06M
93.268 Immunization Cooperative Agreements $5.23M
14.218 Community Development Block Grants/entitlement Grants $2.59M
14.239 Home Investment Partnerships Program $1.16M
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $1.16M
11.307 Economic Adjustment Assistance $1.02M
10.557 Special Supplemental Nutrition Program for Women, Infants, and Children $820,299
14.231 Emergency Solutions Grant Program $551,446
94.016 Senior Companion Program $363,940
16.922 Equitable Sharing Program $242,985
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $236,718
93.069 Public Health Emergency Preparedness $203,519
14.228 Community Development Block Grants/entitlement Grants $197,395
20.600 State and Community Highway Safety $128,595
93.053 Nutrition Services Incentive Program $124,284
66.458 Capitalization Grants for Clean Water State Revolving Funds $108,605
93.556 Promoting Safe and Stable Families $95,078
16.575 Crime Victim Assistance $89,282
93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $82,441
94.002 Retired and Senior Volunteer Program $78,687
93.991 Preventive Health and Health Services Block Grant $78,575
16.738 Edward Byrne Memorial Justice Assistance Grant Program $65,126
95.001 High Intensity Drug Trafficking Areas Program $44,539
16.034 Coronavirus Emergency Supplemental Funding Program $39,201
97.067 Homeland Security Grant Program $34,950
16.742 Paul Coverdell Forensic Sciences Improvement Grant Program $31,188
93.116 Project Grants and Cooperative Agreements for Tuberculosis Control Programs $27,645
16.588 Violence Against Women Formula Grants $27,578
93.558 Temporary Assistance for Needy Families $22,810
97.042 Emergency Management Performance Grants $8,561
66.472 Beach Monitoring and Notification Program Implementation Grants $219
10.558 Child and Adult Care Food Program $84
45.310 Grants to States $-261