Finding 946841 (2022-002)

Recordkeeping Concerning Duplication of Benefits - COVID-19 Community Development Block Grant/Entitlement Grants (AL #14.218) Criteria: Internal controls should be in place under the COVID-19 Community Development Block Grant/Entitlement Grants, to ensure there is not a Duplication of Benefits (DOB) for business assistance activities. All CDBG-CV grantees are required to establish and maintain adequate procedures to prevent any duplication of benefits for assisted activities (as discussed in Section III.B.9. of the CDBG-CV Notice). To demonstrate that no financial assistance has been received or is available to pay costs charged to a CDBG-CV grant, a grantee may demonstrate that no other funds are available for an activity by maintaining records of compliance with mandatory duplication of benefits requirements described in Section III.B.9. Condition and Context: During testing of subawards under activities allowed or unallowed, we noted that the City did not perform their own assessment as to whether business applicants had received financial assistance from other sources. Although they did require applicants to indicate whether other sources had been awarded and accepted or applied for from other sources, an independent review by the City was not conducted to verify these statements. Cause: The City was not aware that of the additional assessment process required to verify the statements made by applicants within their signed applications regarding whether other sources of financial assistance had been utilized or applied for in paying related expenditures. Effects: The City was not in compliance with the recordkeeping requirements. Recommendation: We recommend the City take the necessary steps to verify that no financial assistance has been received or is available to pay costs charged to a CDBG-CV grant for each recipient and maintain the documentation of these results within their files. Auditee’s Response: As noted previously, the City’s Community Development Department is in the process of rewriting its Policies to include the CDBG-CV provisions. Those updated policies will include safeguards to ensure no duplication of benefits will accrue and proper documentation of procedures taken.