Finding 946840 (2022-001)

Policies and Procedures - COVID-19 Community Development Block Grant/Entitlement Grants (AL #14.218) Criteria: As the use of funds under the CDBG-CV have specific uses and requirements which are more narrow than those of normal operations under the City’s Community Development Block Grant/Entitlement Grants, specific written policies and procedures which address the small business grant assistance, the rental assistance, or the public improvement programs of the CDBG-CV grant should be created in order to ensure sound internal controls surrounding programs. Condition and Context: During testing of CDBG-CV funds, it was noted that the City had not prepared policies and procedures specific to the small business grant assistance, the rental assistance, or the public improvement programs of the CDBG-CV grant. This was noted in a monitoring letter from The U.S. Department of Housing and Urban Development. Although the City has since established certain written procedures to address the small business grant assistance and rental assistance programs, they have not established written procedures for the CDBG-CV public improvement program and have not addressed all components of the initial finding. Cause: The City was unaware that formalized written policies were required prior to the distribution of the funds. Effects: The City was not in compliance with the formal policy and procedure requirements. Recommendation: We recommend the City review current written policies and address the missing components of the CDBG-CV public improvement program; monitoring standards and timeframes, financial management; period of performance, record retention, program income, public service cap, special economic development underwriting requirements, duplication of benefits under the rental assistance program, emergency payments; a system to organize financial statements, document costs, and further ensure internal controls have been and are followed for the CDBG-CV programs. Auditee’s Response: The City’s Community Development Department is in the process of rewriting its Policies to include the CDBG-CV provisions. Those policies should be completed within the next couple of months.