Finding Text
Finding 2023-101 — Timeliness of Subrecipient Payments – Significant Deficiency in
Internal Controls over Compliance (Special Tests)
Federal program information:
Funding agencies: U.S. Department of Housing and Urban
Development
Titles: Emergency Shelter Grants Program
Assistance Listing Number: 14.231
Award numbers: C21-0580, 154900, 152126-0, ADES18-206228
Pass-Through grantors: City of Glendale, Arizona, City of Phoenix, Arizona
and Arizona Department of Economic Security
Compliance Requirements: Special Tests – Payments to Subrecipients
Questioned Costs: N/A
Criteria: Code of Federal Regulations § 576.203(c) Obligation, expenditure
and payment requirements state that recipients of ESG funds must
pay each subrecipient for allowable costs within 30 days after
receiving the subrecipient’s complete payment request.
Condition: For 8 of 30 subrecipient payments selected for review it was noted
that the payments were not made within the 30 day allowable period.
Per discussion with management it was determined that the
payments were not made within the time limit as a result of missing
or inaccurate information in the subrecipient’s drawdown requests.
However, no additional documentation could be provided to show
that items were missing from the drawdown requests.
Cause and Effect: The organization does not have adequate policies and procedures in
place to document the subrecipient drawdown review and they did
not maintain adequate supporting documentation to show draw down
requests were incomplete. The result is that there is increased
chance of non-compliance with the requirements of the grant.
Auditors’
Recommendations: The organization should establish policies and procedures to ensure
that drawdown requests are documented when received and should
maintain adequate documentation to substantiate delays in
payments made to subrecipients.