Finding 972255 (2022-002)

Material Weakness
Requirement
ABH
Questioned Costs
$1
Year
2022
Accepted
2024-05-03
Audit: 305456
Organization: City of Anaheim (CA)
Auditor: Kpmg LLP

AI Summary

  • Core Issue: The City of Anaheim failed to disburse funds for the CAPP and CWWAPP programs within the required 60-day timeframe, resulting in delays and potential over-awards to customers.
  • Impacted Requirements: Compliance with federal guidelines under 2 CFR 200.303 and specific program requirements for timely allocation of funds and accurate crediting of customer accounts.
  • Recommended Follow-Up: Enhance internal controls to ensure timely disbursement and conduct thorough reviews of customer accounts to prevent over-awards; consider requesting time extensions from the grantor if deadlines cannot be met.

Finding Text

Finding 2022-002 – Allowable Costs/Costs Principles and Period of Performance Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN Number: 21.027 Federal Agency: United States Department of the Treasury Federal Award Year: 2022 Grant number: CAPP-PN-2022-05, CA 3010001, and 256399-01 Pass-Through Entity: State of California, Department of Community Services & Development and State Water Resources Control Board Criteria: The State of California (the State) passed through funding to the City of Anaheim (the City) for the California Arrearage Payment Program for electric customers (CAPP) and the California Water and Wastewater Arrearage Payment Program (CWWAPP). Both CAPP and CWWAPP have a provision that required the City to allocate payments to the customer accounts within 60 days of receiving payment from the State. Specifically, per section B, Program Requirements, of the California Water and Wastewater arrearage payment program guidelines, there is a requirement that notes “Water systems that participate in the program must allocate payments as bill credits to customer accounts within 60 days of receiving payment .” Per CAPP Program Notice No. 2022-01, there is a requirement that notes “Within 60 days of receiving CAPP funds, a utility applicant shall issue CAPP assistance benefits to customers as bill credits and include a statement that the credits are a result of California’s CAPP funding.” Additionally, both CAPP and CWWAPP provided for the funds to be utilized for customers arrearages accrued during the COVID-19 pandemic bill relief period of March 4, 2020 through June 15, 2021 net of any late fees which are to be waived. CWWAPP provisions are included in Section B Program Requirements and Appendix A, Section 1, Eligibility of the California Water and Wastewater arrearage payment program guidelines. For CAPP the eligibility determinations are included in the 2022 CAPP Frequently Asked Questions. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are allowable and adhere to the required period of performance. Condition and Context: The City made two disbursements under the CWAPP program for water customers on March 2, 2022 and June 21, 2022. The water funds were received by the City on January 25, 2022. The second disbursement made by the City on June 21, 2022 in the amount of approximately $102,000 was not within the 60-day requirement. The CAPP funds were received by the City on December 16, 2021. The City disbursed the CAPP funds on February 25, 2022 in the amount of approximately $4.7 million which was past the 60-day requirement. Additionally, we selected a sample of 60 customers totaling approximately $53,000 stratified between electric, water, and wastewater services and noted 3 of the samples where the City had credited the customer accounts in amounts that exceeded the eligible amounts billed during the period net of subsequent payments and adjustments from March 4, 2020 to June 15, 2021. Two of the three exceptions were residential water customers with a combined over award of $40.89 and one exception was for a commercial electric customer with an over award of $14.60. Cause and Effect: In discussing the 60-day disbursement condition with the City, management stated the focus was on disbursing the funds correctly. For the CAPP funds, the holidays impacted the disbursement timeline. For the CWWAPP funds, the first disbursement did not utilize all the funds. Therefore, management prepared a second disbursement to utilize the funds provided by the State which was 87 days outside the 60-day requirement. All three customer account over awards included partial cash payments and/or adjustments subsequent to management’s initial determination of delinquent account balances eligible for bill credits as defined by the grant guidance, but prior to the credit application date. The timing of the initial credit balance determinations versus the posting of ongoing adjustments could create differences in the allowable credit balances. The City’s manual review process of the adjustments did not identify the discrepancies. Questioned Costs: $55.49 Whether the sampling was a statistically valid sample: This sample was not intended to be, and was not, a statistically valid sample. Repeat Finding: No Recommendation: We recommend the City enhance their internal controls to include a timeline that would comply with the grant requirements. In the event, such timelines can not be adhered to, the City should work with the grantor for a time extension. For accounts with multiple adjustments, a more detailed review of the accounts should be performed if adjustments or cash payments are made subsequent to the City’s credit amount determination. Management’s Response: Management agrees with this finding. In order to ensure adherence to the stipulated 60-day window for credit applications, we have initiated immediate testing of bill notices upon receipt of CWWAPP disbursement checks. Simultaneously, a secondary query has been implemented to validate consistency between the initial query and the present data. To mitigate the risk of over awarding eligible customers, a final query will be conducted prior to disbursement to confirm the accuracy of the awarded amounts for each eligible account.

Categories

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles Eligibility Period of Performance Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties Special Tests & Provisions

Other Findings in this Audit

  • 395810 2022-001
    Material Weakness Repeat
  • 395811 2022-002
    Material Weakness
  • 395812 2022-002
    Material Weakness
  • 395813 2022-002
    Material Weakness
  • 972252 2022-001
    Material Weakness Repeat
  • 972253 2022-002
    Material Weakness
  • 972254 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $97.66M
21.027 Coronavirus State and Local Fiscal Recovery Funds $32.91M
21.023 Covid-19 - Emergency Rental Assistance Program $15.82M
21.023 Emergency Rental Assistance Program $13.88M
14.231 Covid-19 Emergency Shelter Grant (esg) Cv $6.52M
14.879 Mainstream Vouchers Program (mv) $5.00M
14.218 Community Development Block Grant/entitlement Grant $3.58M
97.083 Staffing for Adequate Fire and Emergency Response (safer) $2.01M
14.871 Section 8 Housing Choice Vouchers (emergency Housing Vouchers) $1.56M
14.241 Housing Opportunities for Persons with Aids $889,771
93.568 Low Income Home Energy Assistance Program (li-Heap) $799,100
17.258 Wioa Adult Program $687,279
14.218 Covid-19 Community Development Block Grant/entitlement Grant Cv $647,661
93.558 Temporary Assistance for Needy Families (community Services- Calworks) $501,601
17.278 Wioa Dislocated Workers Formula Grants $494,735
17.259 Wioa Youth Activities $420,622
16.710 Public Safety Partnership and Community Policing Grants $347,847
21.027 Covid-19 - Coronavirus State and Local Fiscal Recovery Funds $334,461
97.039 Hazard Mitigation Grant $275,698
17.278 Wioa Dislocated Workers Formula Grants (rapid Response/layoff Aversion) $245,340
16.034 Covid-19 Coronavirus Emergency Supplemental Funding Program $190,419
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $136,549
97.067 Homeland Security Grant Program $128,558
14.896 Pih Family Self-Suffiency Program $121,849
15.916 Land and Water Conservation Fund - Center Greens $95,811
14.231 Emergency Shelter Grant (esg) $91,929
16.922 Equitable Sharing Program $86,590
97.133 Preparing for Emerging Threats and Hazards $82,667
20.507 Federal Transit_formula Grants $72,255
17.277 Wioa National Dislocated Worker Grants / Wia National Emergency Grants $61,250
93.686 Temporary Assistance for Needy Families (ending the Hiv Epidemic) $58,800
20.616 National Priority Safety Programs $45,575
16.320 Services for Trafficking Victims $42,300
97.042 Covid-19 - Emergency Management Performance Grants $40,408
17.278 Covid-19 Wioa Dislocated Workers Formula Grants (library Workforce Partnership Initiative) $19,487
16.734 Special Data Collections and Statistical Studies $17,500
45.310 Grants to States - Library Services and Technology Act (lsta) - Workforce Partnership Initiative 2 $12,793
45.310 Grants to States - Library Services and Technology Act (lsta) - Workforce Partnership Initiative $12,069
17.258 Wioa Adult Program (regional Organizers/regional Training Coordinators) $12,043
14.239 Home Investment Partnerships Program (home) $11,829
45.310 Grants to States - Library Services and Technology Act (lsta) - Bringing Virtual Programming to the People $10,012
20.600 State and Community Highway Safety $8,144
97.042 Emergency Management Performance Grants $5,927
16.607 Bulletproof Vest Partnership Program $5,488
17.258 Wioa High Performance Bond $3,846
20.319 High-Speed Rail Corridors and Intercity Passenger Rail Service Ð Capital Assistance Grants $2,631
20.205 Highway Planning and Construction $2,256
16.738 Edward Byrne Memorial Justice Assistance Grant Program $2,117