Finding Text
Finding Number: 2022 002 Program: Emergency Solutions Grant Program (ESG) ALN #: 14.231 Federal Agency: Housing and Urban Development Federal Award Number: E 20 MC 25 005; E 20 MW 25 0005 Award Year: 7/1/2021 ? 6/30/2022 E 21 MC 25 0005 Special Tests; Payments to Subrecipients Type of finding: Material Weakness and Material noncompliance Prior year finding: No Statistically valid sample: No Criteria According to 24 CFR section 576.203, a recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient?s complete payment request. According to 2 CFR 200.303, the non Federal entity must Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City?s ESG Program has a control in place to ensure that invoice cover sheets (i.e. reimbursement requests) are reviewed in a timely manner so that the City can subsequently reimburse subrecipients within 30 days and remain in compliance with the requirement; however, the control to ensure timely payments to subrecipients was not operating effectively as there was a 8 to 110 day lag between the date the reimbursement request was received and the payment date. During our audit, we noted 14 of 21 subrecipient reimbursements selected for testing were not completed within 30 days of receiving the completed request for payment. Cause The City did not have effective controls in place to ensure subrecipients were paid for allowable costs within 30 days after receiving the subrecipient?s complete payment request. Effect Lack of effective controls resulted in the City not complying with 24 CFR section 576.203. Questioned Costs None Recommendation We recommend the City establish effective controls to ensure payment requests received from subrecipients are paid within 30 days of receipt. Views of Responsible Officials and Corrective Actions The City will establish the following procedures to ensure payment requests received from subrecipients are paid within 30 days of receipt of a complete request for reimbursement: 1. Department of Human Service Programs (DHSP) Contract Manager reviews invoices within 5 business days of receipt of request for reimbursement from subrecipient. a. If invoice is complete, original date of receipt is recorded. b. If invoice is incomplete, subrecipient is notified of items or documentation that is missing and receipt date is updated to reflect date of receipt of complete invoice. 2. Contract Manager approves payment request and submits to DHSP Fiscal staff for processing. 3. Fiscal staff processes and submits to Auditing Department as Priority payment. Implementation Date Implementation will begin April 15, 2023, when the FY23 3rd Quarter invoices are anticipated to be received by ESG subrecipients. Responsible Officials Anthony Woods, Planner and Contract Manager; Liz Mengers Magargee, DHSP Planning and Development Manager; Giovanna Alvarez, DHSP Fiscal Administrator; Janice Alger, Assistant Director of Administration, Human Services