Finding 58924 (2022-004)

2022-004 Grant Funds Disbursement Major Program U.S. Department of Housing and Urban Development Pass-through: Texas General Land Office and Texas Department of Agriculture Community Development Block Grants AL: 14.228 Criteria Federal grant payment requirements as per 24 CFR 570.489(c) states that the State's requests for payment, and the Federal Government's payments upon such requests, must comply with 31 CFR part 205. The State must use procedures to minimize the time elapsing between the transfer of grant funds and disbursement of funds by the State to units of general local government. States must also have procedures in place, and units of general local government must use these procedures to minimize the time elapsing between the transfer of funds by the State and disbursement for CDBG activities. As the grant is administered through the Texas General Land Office (GLO), the GLO defines the ?time elapsed? to be a period not to exceed 3 business days from the date of receipt/deposit of funds. The Town is expected to disburse grant funds within this specific timeframe as stated by the GLO. If the Town is unable to disburse grant funds within the specified timeframe, the Town is to document the specific reasons for such a delay. This has been identified as a significant deficiency in the Town?s internal control over compliance. Statement of Condition In the course of performing the audits of the CDBG-DR and CDBG-MIT grants, it was determined that an instance in the CDBG-DR grant and an instance in the CDBG-MIT grant in which grant funds had been disbursed after the required 3 business day timeframe. Statement of Cause The Town is inefficiently monitoring the bank account in which grant funds are deposited and ensuring that grant funds are then disbursed within the 3-business day requirement as stated by the GLO. Statement of Effect or Potential Effect This significant deficiency in the Town?s internal control over compliance results in a compliance issue associated with the time elapsed requirements of the CDBG-DR and CDBG-MIT grants. Questioned Costs No questioned costs were identified in association with this finding. Perspective Information This finding is considered an isolated instance as the instance in the CDBG-DR grant and the instance in the CDBG-MIT grant occurred in the same time period and the fact that all other CDBG-DR and CDBG-MIT grant funds were disbursed within the 3-business day requirement. Identification of Repeat Findings This is not a repeat finding. Recommendation To remedy the control deficiency related to grant funds being disbursed within the 3-business day compliance requirement, the Town would need to monitor bank account activity on a timely basis.