Finding Text
Fiscal year finding initially occurred: 2022
CDBG – Entitlement Grants Cluster (14.218)
B-20-MW-22-0002
CRITERIA: The Uniform Guidance requires a grant recipient to establish and maintain effective controls in order to ensure compliance with the federal award regulations, statutes, and terms and conditions of the grant.
CONDITION: A sample of 30 disbursement transactions was selected for testing from a population of 125 transactions. The test found the following: 20 transactions totaling $205,617 for service contracts that the organization did not obtain and maintain written price and/or rate quotations from an adequate number of qualified sources when the contract ranged between $10,000 - $250,000; 2 transactions totaling $5,049 appeared to be sponsorships/donations; 2 transactions totaling $27,083 were duplicated in another reimbursement request; 1 transaction in the amount of $11,220 for an event had multiple line items identified on the invoice without sufficient cost detail on each to determine if the amounts were reasonable and necessary; 1 transaction totaling $5,000 didn’t have sufficient detail on the invoice to determine if the activity was allowable and if the amounts were reasonable and necessary; 1 transaction totaling $4,910 for 11 hotel rooms to a conference had no supporting documentation justifying the allowability of the conference or justification for the community roles for each attendee; and 1 reimbursement for a contract payment did not have support for $5,294. The total questioned costs amounted to $264,173. The sample was nonstatistical.
CAUSE: The Organization does not have internal controls in place to ensure compliance with the allowable costs and allowable activities requirements.
EFFECT: The Organization was unable to provide relevant documentation to support compliance with the federal award regulations, statutes, and terms and conditions of the grant.
RECOMMENDATION: The Organization should establish and maintain effective internal controls to ensure compliance with federal award regulations, statutes, and terms and conditions of the grant.
MANAGEMENT’S CORRECTION ACTION PLAN: The Mayor’s Healthy City Initiative grew rapidly as the need for services provided by the organization were in high demand. The group worked to meet the needs of the community and simultaneously create an infrastructure to support the growing demand. While all disbursements made related to appropriate initiatives and programs, instances did occur in which the vendor was unable to provide the specific documentation required by the grant in the required timeframe. The Mayor’s Healthy City Initiative team coordinated with the City of Baton Rouge’s Office of Community Development to ensure that disbursements were appropriate and, in some instances, relied on their approval for payment.
As with many organizations of this type, the staff was very small. In addition, during the audited program year the Executive Director role was vacant for an extended period of time which presented additional challenges.
The Executive Director role has been filled and the role of our external accountants has been expanded to offer additional assistance. We are continuing to work to establish and maintain effective internal controls to ensure compliance with federal award regulations, statutes and terms and conditions of each grant.