Finding Text
Finding 2022-001 Significant Deficiency Federal Program: HOME Investment Partnerships program Assistance Listing Number: 14.239 Federal Grantor: Department of Housing and Urban Development Federal Award Year: 2021-2022 Criteria: Since the Federal Government is at risk for loans until the debt is repaid, the following guidelines must be used to calculate the value of federal awards expended under loan programs: (1) Value of new loans made or received during the audit period. (2) Beginning of the audit period balance of loans from previous years for which the Federal Government imposes continuing compliance requirements. (3) Any interest subsidy, cash, or administrative cost allowance received. Condition: Under the HOME Investment Partnerships Program, the City of Inglewood has a homeowner Rehabilitation Loan Program that provides assistance in the form of deferred loan to senior citizens with limited household income. Loans must be repaid to the City if the property is refinanced for cash, sold, or the title of the property is transferred. The City maintains a listing of loans outstanding which reconciles to the loan receivables balance on its general ledger. However, the listing contains loans that have been paid off that should not be on the list and should not be included as loan receivable. Cause of Condition: Due to staff turnover at the City, the list of outstanding loans in the HOME loan program have not been properly updated. Effect of Condition: The listing of HOME loans outstanding as of September 30, 2022, has loans that have been paid off and should no longer be on the list and reflected as loan receivable. Out of our sample of seven loans from the outstanding list of loans as of September 30, 2022, three of them were paid off and should not have been on the list as outstanding. Questioned Costs: Unknown Context: The City has a revolving HOME loan program and maintains a listing of loans outstanding which reconciles to the loan receivable balance on its general ledger. Recommendation: We recommend that the City reviews each loan on its current HOME loan outstanding schedule to determine the status of each loan and reviews the activity in the program to ensure that loans made from the HOME program have been properly recorded as receivable and listed on the HOME loan receivable schedule maintained by the City. Also, we recommend that the City establish controls to monitor and reconcile loan activities on a quarterly basis.