Finding Text
Finding Reference Number: SA 2021-003 Cash Management
AL Number: 14.218, 14.239
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants (CDBG)
HOME Investment Partnerships Program
Federal Agency: Department of Housing and Urban Development
Federal Award Identification Number: B-14-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037
M18-MC060237, M19-MC060237, M20-MC060237
Criteria: 24 CFR 570.902 indicates that the Department of Housing and Urban Development will review the performance of each entitlement, HUD-administered small cities, and Insular Areas recipient to determine whether each recipient is carrying out its CDBG-assisted activities in a timely manner. One of the factors in determining timeliness is the timing of the use of entitlement grant funds and the amount of undisbursed entitlement grant funds that remain in the Integrated Disbursement Information System (IDIS).
Therefore, the City should submit drawdown requests in the IDIS system throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year.
Although the HOME Investment Partnerships Program does not appear to have a timeliness requirement, other than 24 CFR 92.500(d) requirement to commit funds within 24 months of the grant award and the eight-year period of performance, the City should also submit drawdown requests in the IDIS system throughout the fiscal year as costs are incurred.
Condition: During our testing of CDBG grant drawdown requests during fiscal year 2021, we noted that a drawdown made in April 2021 was for December 2020 expenditures, the drawdown made in May 2021 was for August 2020 expenditures, the drawdown made in June 2021 was for December 2020 expenditures and the drawdown made in September 2022 was for February 2021 to June 2021 expenditures. The City submitted the drawdown requests in the IDIS well over three months after the program expenditures were incurred. We also noted that the City did not submit drawdowns for fiscal year 2021 program expenditures we tested totaling $710.
During our testing of HOME program grant drawdown requests during fiscal year 2021, we noted that two drawdowns made in June 2022 were for November 2020, January 2021, March 2021 and June 2021 expenditures, and one drawdown made in September 2022 was for March, April, May and July 2021 expenditures.
Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of being out of compliance with the provisions of 24 CFR 570.902.
Cause: We understand that the drawdowns were delayed due to staff turnover.
Recommendation: The City should develop procedures to ensure that drawdown requests are submitted more frequently, at least on a quarterly basis, and should requests reimbursement for the program expenditures noted above as soon as possible.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.