Some pretty rough findings by the Washington State Auditor today after an audit of Everett’s handling of Federal Grant Dollars. Some of the observations released today…
The City’s internal controls were inadequate to ensure compliance with federal requirements of its Community Development Block Grant.
The City did not ensure it used program income to pay for, or reduce, program-related costs prior to seeking federal reimbursement. Federal regulations require the City to substantially spend program income received from repayment of Housing Rehabilitation and Economic Development loans before requesting more funds. The City and the grantor have discussed that “substantially disbursed” could mean a balance of $200,000 remaining in the revolving loan account. The City did not follow this guideline. From July through December, the City requested funding totaling $188,514 even though it had program income available in the revolving loan account ranging from $315,492 to $662,510.
The City distributed $228,971 in Program funds to subrecipients during 2011. Federal Office of Management and Budget Circular A-133 requires the City to obtain audit reports from any subrecipient that spends $500,000 or more in federal funds. The City is required to monitor subrecipient’s activities to provide reasonable assurance that the subrecipient administers federal awards in compliance with federal requirements. Our audit found one subrecipient did not submit its required 2009 single audit report to the City until we asked to see it during our audit. The 2009 report, dated February 2011, was completed more than nine months after the fiscal yearend, which is not in compliance with federal requirements. The City did not notice the report was not included with the subrecipient’s 2011 grant application.
The City had inadequate internal controls to ensure compliance with time and effort requirements for salaries and benefits charged to the grant.
The State Auditor made several suggestions to City of Everett officials to avoid such findings in the future...
We recommend the City:
• Establish and follow controls to ensure it uses program income prior to submitting
costs for reimbursement. • Establish controls to ensure subrecipients comply with grant agreements and requirements.
• Maintain appropriate documentation, including semi-annual certifications, if
appropriate, for payroll and benefits of salaried employees charged to federal grants.
• Dedicate sufficient resources to ensure that City personnel assigned to manage grant programs are properly trained to comply with grant requirements.
The City of Everett responded to the auditors findings by describing changes it plans to make…
-Establish and follow controls to ensure it uses program income prior to submitting costs for reimbursement.
-Establish controls to ensure sub recipients comply with grant agreements and requirements.
-Maintain appropriate documentation, including semi-annual certifications, if appropriate, for payroll and benefits of salaried employees charged to federal grants.
-Dedicate sufficient resources to ensure that City personnel assigned to manage grant programs are properly trained to comply with grant requirements.