To ensure that recipients spend advanced funds promptly and that it has accurate information about outstanding advanced funds, HCD should do the following:
- Reconcile advances to its accounting records and to documentation to ensure that recipients spent all of the advances that HCD made previously.
The DFA CalHome program has updated their desk manual (pg 54) to reflect the change that staff must ensure status reports are current and reconciliation is required prior to disbursing additional funds. This issues is fully implemented.
The BEGIN Program updated its desk manual to include the Mortgage Draw Request process to ensure that recipients spend all advances previously made (AF6a-1, red text). All BEGIN funds have been reconciled. Staff track and monitor draws and usage of advances and reimbursements via the Borrower Summary (reconciliation) as draw requests are received from the Awardee (AF6a-2). Required reporting is tracked through a log (AF6a-3). CalHome implemented a Management Memo outlining its advanced funds policy (AF6b-1), and updated its desk manual with staff instructions on the new policy for unused advanced funds (AF6b-2, red text). Staff use the Borrower Summary (reconciliation) to track, monitor, and account for use of advances (AF6b-3). Management has implemented the Draw Tracking log to monitor available funds and current reporting status in administering the new policy that no request for funds will be processed until a recipient is current (AF6b-4). Management has implemented the Award Usage report to monitor and track the status of advanced fund usage that were issued greater than 180 days since the date the report is generated.
Although HCD provided documentation that it is tracking and reconciling its advances for its BEGIN program, the documentation provided for its CalHome program does not show that the advances are being reconciled with its accounting records.
The BEGIN Program is revising its Mortgage Assistance Draw Request process in the BEGIN Desk Manual (pages 9-11) to address advances over 90 days. BEGIN program staff has worked diligently to reconcile all outstanding balances, and are close to full reconciliation.
For the CalHome program, DFA staff and management are reviewing current regulations to ensure the appropriate controls are in place for the continued efficient and effective administration of advances.
Agency responses received are posted verbatim.