Recurring Findings

Housing and Community Development: Recurring Significant Internal Control Deficiencies
Federal Program Issue First Year Reported
Department's Assertion Page Number
Community Development Block Grants/State's Program Housing did not issue management decisions related to subrecipients’ Office of Management and Budget (OMB) Circular A-133 audit findings within the required six-month time frame. 2007-08
Fully corrected. The condition that resulted in the Audit Division's untimely direction of the OMB Circular A-133 audits to program staff was that the key Audit Division staff person was not available to complete the task and, at that time, backup staff was neither identified nor trained to accomplish that responsibility. Since this issue was identified, backup staff have both been identified and trained. Further, the Audit Division's written procedures, entitled "Single Audit Desktop Procedures for Audit Division," were issued on February 25, 2009, and the backup staff was trained on these procedures on March 13, 2009. The Audit Division also will annually review the "Single Audit Desktop Procedures" and update it for applicable changes. The Home Investment Partnerships Program and Community Development Block Grant Program staff will work with Housing's Audit Division to ensure delays in issuing management decisions regarding audit findings are minimized. To assist in this effort, the program staff has developed written procedures for routing and tracking the audit findings and has designated an OMB Circular A-133 audit-finding coordinator to expeditiously address the resolution of any findings. 190
Community Development Block Grants/State's Program Housing lacks adequate internal controls to ensure the completeness of the Section 3 Summary Report that it submits to the U.S. Department of Housing and Urban Development (HUD). Further, Housing could not demonstrate how it arrived at the amount of total resources available that it reported to HUD in the performance report for fiscal year 2006–07. 2007-08
Fully corrected. Housing used its centralized database and reporting system (CAPES) to create a report that lists all grantees and the funded activities. Procedures have been written that instruct staff to use this list to identify grants of $200,000 or more for Section 3 reportable activities such as housing rehabilitation, housing construction, public facilities, or community facilities. Staff have been instructed to either make sure that the Section 3 report is filed, or determine by contacting the grantee that circumstances do not warrant filing the report. Procedures also require that receipt of the reports, or the reason why the report is not required, be entered into the centrally maintained list. 187
Community Development Block Grants/State's Program Housing’s process for reviewing subrecipient fund requests does not provide reasonable assurance that its subrecipients’ expenditures are only for allowable activities and costs. 2007-08
Partially corrected. Housing has implemented a requirement that subrecipients provide source documentation when requesting grant funds. In addition, Housing requires subrecipients to submit signature cards authorizing which officials may sign funds requests before submitting them to the State of California. Furthermore, Housing will adhere to its monitoring policies and procedures to identify subrecipients at high risk of noncompliance with program requirements by annually adopting the monitoring plan, training its staff to conduct risk assessments and on-site visits of the high-risk grantees, developing a three-month schedule of on-site visits based on the availability of resources, and supplementing the on-site visits with additional monitoring techniques, such as desk monitoring. 177
HOME Investment Partnerships Program Housing did not issue management decisions related to subrecipients’ Office of Management and Budget (OMB) Circular A-133 audit findings within the required six-month time frame. 2007-08
Fully corrected. The condition that resulted in the Audit Division's untimely direction of the OMB Circular A-133 audits to program staff was that the key Audit Division staff person was not available to complete the task and, at that time, backup staff was neither identified nor trained to accomplish that responsibility. Since this issue was identified, backup staff have both been identified and trained. Further, the Audit Division's written procedures, entitled "Single Audit Desktop Procedures for Audit Division," were issued on February 25, 2009, and the backup staff was trained on these procedures on March 13, 2009. The Audit Division also will annually review the "Single Audit Desktop Procedures" and update it for applicable changes. The Home Investment Partnerships Program and Community Development Block Grant Program staff will work with Housing's Audit Division to ensure delays in issuing management decisions regarding audit findings are minimized. To assist in this effort, the program staff has developed written procedures for routing and tracking the audit findings and has designated an OMB Circular A-133 audit-finding coordinator to expeditiously address the resolution of any findings. 188
HOME Investment Partnerships Program Housing did not report to the Department of Finance for inclusion in the Schedule of Federal Assistance the correct amount of its outstanding loans of HOME Investment Partnership Program funds for which affordability requirements continue for five to 20 years. 2007-08
Remains uncorrected/agree with finding. By December 31, 2009, Housing will reconcile the California State Accounting and Reporting System (CALSTARS) S01 report to the centralized database and reporting system (CAPES) and City Software list of state loans to ensure all information in CALSTARS is correct, submit appropriate forms/documentation to the Accounting Branch to make any required changes; and develop procedures to ensure new awards to community housing development organizations continue to be correctly coded in CALSTARS. 184
HOME Investment Partnerships Program Housing lacks adequate internal controls to ensure it reports accurate matching information to the U.S. Department of Housing and Urban Development. Further, Housing at times lacked supporting documentation for some of the amounts used in its matching determinations. 2007-08
Partially corrected. Housing has selected a random sample of subrecipients to ensure the data provided in the Project Completion Report is accurately portrayed in the match report, and tested the computer that generates the match reports before the report is generated to make sure that the computer program produces an accurate report with the data in the system at the time. Housing has started training enough staff to prepare the report so in the event of staff absences, the report will be generated by staff, with the fiscal manager responsible to ensure its accuracy. Training will be completed by August 31, 2009. 182
HOME Investment Partnerships Program Housing lacks adequate internal controls to ensure the accuracy of the data in and the completeness of the annual Section 3 Summary Report it is required to submit to the U.S. Department of Housing and Urban Development (HUD). 2007-08
Partially corrected. Housing has developed procedures to obtain and report to the maximum extent practicable the Section 3 activity from its subrecipients that meet the requirements to report Section 3 activity. In addition, to ensure the report accurately reflects the State's Section 3 activities reported by subrecipients, Housing has selected a random sample of subrecipients to ensure the data provided in their Section 3 report is accurately portrayed in the Section 3 Summary Report; and tested the computer program that generates the Section 3 report before the report is generated to make sure the computer program produces an accurate report with the data in the system at the time. Housing has started training enough staff to prepare the report so that in the event of staff absences, the report will be generated by staff, with a HOME Investment Partnerships Program manager or specialist responsible to ensure its accuracy. Training will be completed by August 31, 2009. 185
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