Item 01: CDBG-DR Quarterly Internal Audit Report

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COSM_Admin

Administrator
Staff member
Receive a presentation from Deloitte and Touche, LLP on the Community Development Block Grant-Disaster Recovery (CDBG-DR) Quarterly Internal Audit Report, and provide direction to Staff.
 

MDerrick

CoSM Members
1. I'm having a hard time understanding why Deloitte made strong recommendations for changes for best practices, but CoSM's decision was largely not to follow the advice due their interpretation of the federal funding requirements and the use of Master agreements for on-call appraisals that need to be increased due to all the neighborhood projects going on right now. It looks like we are regularly increasing the Master Agreements by $50K (City Manager approved) and taking larger increases to CC. How often are these $50K increases happening and is CC informed of how much more money winds up going into these contracts at the end. I don't remember any reports specific to that, but these are ongoing projects. Are the consultants not familiar with the requirements of HUD and looking at these situations through a lens of "all federal grants, regardless of funding source"?

2. In six (6) instances, both voucher creation and drawdown occurred in Q2 rather than in the quarter when the expenditure was incurred or shortly thereafter - meaning general funds were used for a long amount of time instead of drawing down the federal funding.
-1D-a. CoSM Response: The City’s practice will continue to be to complete drawdowns on a monthly basis or at a maximum quarterly which may cause the draw to occur in the next quarter. HUD does not require that drawdowns be completed in the quarter in which the expenditure was incurred, and the City is in compliance with HUD drawdown requirements. Question – why are we not following the advice of “best practices” the auditors recommended?


Thanks!
 

COSM_Admin

Administrator
Staff member
Response to CM Derrick, provided by Purchasing Manager, Lynda Williams:
1. I'm having a hard time understanding why Deloitte made strong recommendations for changes for best practices, but CoSM's decision was largely not to follow the advice due their interpretation of the federal funding requirements and the use of Master agreements for on-call appraisals that need to be increased due to all the neighborhood projects going on right now. It looks like we are regularly increasing the Master Agreements by $50K (City Manager approved) and taking larger increases to CC. How often are these $50K increases happening and is CC informed of how much more money winds up going into these contracts at the end. I don't remember any reports specific to that, but these are ongoing projects. Are the consultants not familiar with the requirements of HUD and looking at these situations through a lens of "all federal grants, regardless of funding source"?

The On-Call Appraisal Contracts with five (5) separate qualified appraisers have each been increased once by $50,000 to allow for additional need. Each of the five (5) qualified appraisers has a contract capacity of $100,000. The master agreements are established to provide appraisals for the Capital Improvement Program, as well as for CDBG-DR and CDBG-MIT projects. These services are required on an “as-needed” basis and as with these kinds of “as-needed” services, the original starting point of $50,000 each was established by the City staff based on the anticipated use at the time of contract execution. City staff determined that based on the increase in projects, the capacity should be increased.
 

COSM_Admin

Administrator
Staff member
Response provided by Marie Kalka, Director of Finance:
Question – why are we not following the advice of “best practices” the auditors recommended?

The City is preparing for the new fiscal year to complete drawdowns on a monthly basis. Once all construction projects are up and running it will be prudent to reimburse the general fund more timely and better manage the City’s cash flow.
 
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