An Internal Audit Report on the

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• Publié par: Fawyeng
• Nombre de lectures: 23
• Langue: English

Extrait

An Internal Audit Report on the
Draw Processing and Monitoring Functions of the Community Affairs
Division’s Community Services Block Grant and Emergency Shelter Grant
Programs
Executive Summary

The Department of Housing and Community Affairs (Department) should improve the
processes used to manage the Community Services Block Grant (CSBG) Program and the
Emergency Shelter Grant Program (ESGP) to ensure that subrecipients are accountable
for the grant funds they receive from the Department and that these programs are
administered efficiently. In program year 2007,
The Community Services Block Grant the Department was awarded $30,208,630 for
Program and the Emergency Shelter the CSBG and $5,157,329 for the ESGP.
Grant Program
The Community Services Block Grant (CSBG)
Program and the Emergency Shelter Grant The Department has good controls over the way
Program (ESGP) are both administered by in which the federal funds are allocated between
Community Services, which is a subset of the
the Department and its subrecipients. However, Department’s Community Affairs Division. (See
the organizational chart in Appendix D.) Both improvements can be made in the use of the
CSBG and ESGP are federally funded grant funds for specific activities. CSBG funds
programs.
designated for the Department’s administrative • CSBG provides funding for local
expenses are spent on training and technical subrecipients to develop and administer
programs to reduce poverty, revitalize assistance provided to subrecipients, which is
low-income communities and empower
not allowable under the Texas Administrative low income families to become self
Code that directs how the CSBG funds should sufficient.
• ESGP provides funding for the be spent. In addition, ESGP funds designated
rehabilitation or conversion of for the Department’s administrative expenses buildings for use as emergency shelters
are spent on developing the 5-Year Housing and for the homeless, and to fund homeless
prevention activities. Urban Development Consolidated Plan which
serves as the state’s application for federal (For additional information on these programs,
funds. However, the ESGP grant does not see the text box on page 5 for CSBG or the text
box on page 27 for ESGP. More detailed allow these funds to be spent on this activity.
background information is also available in Both the CSBG and ESGP grants allow up to Appendix B.)
5% of the funds to be used to cover the
Department’s administrative costs. In 2007, the administrative portion of the grants was
$1,510,432 for CSBG and $257,866 for ESGP.

Improvements should also be made to ensure that CSBG administrative funds are spent
on a timely basis. At the end of each program year, there is approximately $1 million in
available grant funds remaining. As of February 2008, the Department was still spending
funds from program year 2006. The guidance on the carryover of administrative funds is
unclear and may require the Department to seek clarification from the U.S. Department
of Health and Human Services.

The Department does a good job of ensuring that the subrecipients receive on-site
monitoring visits as required. However, the processes used to monitor the subrecipients
for both programs should be enhanced to ensure that the subrecipients comply with laws
and program rules and adhere to the Department’s program requirements. There are
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An Internal Audit Report on the
Draw Processing and Monitoring Functions of the Community Affairs
Division’s Community Services Block Grant and Emergency Shelter Grant
Programs
inconsistencies in the processes used to identify and categorize the monitoring results for
both programs. These inconsistencies increase the risk that subrecipients may be not be
held accountable and that problems at the subrecipient level may not be identified in time
for the Department to intervene and provide assistance.

Other Findings
The processes used to track and monitor CSBG subrecipients’ expenditures needs
improvement. Some CSBG subrecipients may be receiving more than a 30-day
supply of funding. Program rules and the CSBG contract limit subrecipients to a
30-day supply of operating funds on hand.
Program officers do not obtain sufficient financial information to evaluate the
CSBG subrecipients’ financial status. Program officers review financial
documentation, but generally have not retained all of the documentation needed to
verify assertions about bank account and general ledger fund balances.
Community Services has not defined the criteria used to decide what sanctions to
apply to subrecipients who have significant or repeated monitoring findings, or
who do not comply with the CSBG program requirements.
The performance information submitted by CSBG subrecipients is not verified by
Community Services staff. As a result, three of the Department’s key
performance measures may not be correct. In addition, this information is used to
calculate annual performance awards paid to subrecipients. Since 1995, $2.3
million has been paid to subrecipients in the form of performance awards.
Federal law requires ESGP applicants to certify that they will comply with
specific rules such as obligating the funds within 180 days of the contract start
date. There are some additional certifications required by federal law that need to
be incorporated into the ESGP application process. In addition, there are several
Texas Administrative Code requirements that should be included in the
monitoring instruments for ESGP to ensure that subrecipients are in compliance
with these requirements.
Follow-up work was performed on thirteen prior audit issues related to
Community Services. Of these issues, twelve (92%) were implemented and will
be closed. One issue was not implemented and will be re-opened as a new finding
for both CSBG and ESGP. See Appendix C for a list of these issues and their
status.

Summary of Recommendations
The salaries of the program officers and the trainer should be allocated between
administrative funds and other funds proportional to the amount of time spent on
these activities, or the training and technical assistance duties should be separated
from monitoring and not charged to administration. An alternative solution is for
the Department to seek a Board-approved change to the Texas Administrative
Code to include training and technical assistance as allowable activities.
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An Internal Audit Report on the
Draw Processing and Monitoring Functions of the Community Affairs
Division’s Community Services Block Grant and Emergency Shelter Grant
Programs
The Department should find an alternate fund to which staff can charge the work
performed on the 5 Year Housing and Urban Development Consolidated Plan.
ent should seek guidance from the U.S. Department of Health and
Human Services regarding whether administrative funds should be liquidated
within the two-year period. In addition, the Department should consider whether
it is retaining administrative funds, and if so, consider re-allocating any un-
liquidated funds to subrecipients for use in serving clients.
Community Services management should provide program officers with a guide
for the designation and disposition of common monitoring issues to generate more
consistent reporting of monitoring findings.
Community Services staff should ensure that CSBG subrecipients do not receive
more than a 30-day supply of funds by reviewing the prior month’s advances for
specific line items and comparing them against the actual expenditures reported
by line item.
Program officers should increase the level of review over subrecipients’ financial
information by obtaining and reviewing a copy of the most recent audited annual
financial report and any associated management letters prior to conducting a
monitoring visit. This information should then be compared to the financial
documents reviewed during monitoring. In addition, they should obtain and
review a complete general ledger printout for the month(s) reviewed.
Community Services should define the range of sanctions that can be used for the
various types of monitoring findings or issues of non-compliance.
When reviewing a sample of client files during monitoring visits, program
officers should re-calculate the reported incomes using the supporting
documentation in the client file to confirm that clients who were reported as
transitioned out of poverty really did so, and that only allowable income is
considered.
All certifications required by federal law should be included in the ESGP
application. In addition, all requirements of the Texas Administrative Code
should be included in the monitoring instruments and reviewed during on-site
monitoring visits.

Management’s Summary of Their Responses
Management generally concurs with the recommendations in the Internal Audit Report
and appreciates the ability to use this audit as a strong foundation for divisional
improvements. The existing internal controls, rules in the Texas Administrative Code an