Finding Text
Finding #SA2021-005: Cash Management
Assistance Listing Number: 14.218
Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants
Name of Federal Agency: Department of Housing and Urban Development
Pass Through Entity: San Joaquin County Community Development Department
Federal Award Identification Number: A-93-916
Criteria: The City should submit drawdown requests to San Joaquin County 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. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the County, unless specifically authorized by the grantor.
Condition: During our testing of grant expenditures and the associated drawdown requests, we noted the following:
• One program disbursement in May 2021 in the amount of $20,100 was not included on a reimbursement request until September 2021.
• One program disbursement in November 2020 in the amount of $14,063 was not included on a reimbursement request until August 2021.
• One disbursement on December 3, 2020 of $5,000 was included in an October 2020 reimbursement that was received on November 10, 2020.
• One disbursement on September 17, 2020 of $3,892 was included in a July 2020 reimbursement that was received on September 8, 2020.
• Three program disbursements totaling $123,693 under the CDBG-CV program were not included on a reimbursement request during fiscal year 2021 or subsequent.
Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the County. And, the City requested and received reimbursement nine to twenty-three days before making the associated payments to two of the vendors.
Cause: We understand that both the variety of program expenditures incurred during the fiscal year, administrated by different departmental staff and staff turnover led to the late preparation of reimbursements and/or failure to file reimbursement requests. City staff was unable to determine why certain program costs were included on reimbursement requests prior to making the associated vendor payments.
Recommendation: The City should develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. In addition, City staff should ensure that costs are incurred prior to including them on a reimbursement request.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.