Finding Text
Program: Emergency Solutions Grant Program (ESG)
ALN #: 14.231
Federal Agency: Housing and Urban Development
Federal Award Numbers: E-20-MC-25-005, E-21-MC-25-0005, E-22-MC-25-0005, E-20-MW-25-005, and
E-20-MW-35-005
Award Year: July 1, 2022–June 30, 2023
Special Tests; Payments to Subrecipients
Type of finding: Material Weakness and Material noncompliance
Prior-year finding: Yes
Statistically valid sample: No
Criteria
According to 24 CFR section 576.203, a recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient’s complete payment request. According to 2 CFR 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition
The City’s ESG Program has a control in place to ensure that invoice cover sheets (i.e., reimbursement requests) are reviewed in a timely manner so that the City can subsequently reimburse subrecipients within 30 days and remain in compliance with the requirement. However, the control to ensure timely payments to subrecipients was not operating effectively as payments to 8 of 19 subrecipients tested had payment dates that ranged from 15 and 255, subsequent to the subrecipient’s completed request for payment.
Cause
The City did not have effective controls in place to ensure subrecipients were paid for allowable costs within 30 days after receiving the subrecipient’s completed payment request. Effect Lack of effective controls resulted in the City not complying with 24 CFR section 576.203.
Effect
Lack of effective controls resulted in the City not complying with 24 CFR section 576.203.
Questioned Costs
None
Recommendation
We recommend the City establish effective controls to ensure payment requests received from subrecipients are paid within 30 days of receipt. Views of Responsible Officials and Corrective Actions
Based on prior year (FY22) findings, the City established the following procedures to ensure payment requests received from subrecipients are paid within 30 days of receipt of a complete request for reimbursement:
1. Department of
Effect
Lack of effective controls resulted in the City not complying with 24 CFR section 576.203.Human Service Programs (DHSP) Contract Manager reviews invoices within 5 business days of receipt of request for reimbursement from subrecipient.
a. If invoice is complete, original date of receipt is recorded.
b. If invoice is incomplete, subrecipient is notified of items or documentation that is missing and receipt date is updated to reflect date of receipt of complete invoice.
2. Contract Manager approves payment request and submits to DHSP Fiscal staff for processing.
3. Fiscal staff processes and submits to Auditing Department as Priority payment. Four of the 19 sampled payment requests were received or processed after receipt of the FY22 audit findings, and all of those requests for reimbursement were paid within 30 days receipt.
Implementation Date
Implementation of the above process began with the FY23 3rd quarter invoices in April 2023.
Responsible Officials
Anthony Woods, Planner and Contract Manager; Liz Mengers, DHSP Planning and Development Manager; Giovanna Alvarez, DHSP Fiscal Administrator; and Janice Alger, Assistant Director of Administration, Human Services