City of Baton Rouge Parish of East Baton RougeLocal Government

Allowable Costs Questioned Costs: $36,420 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) (COVID-19) Grant No(s): N/A Criteria: Title 2 CFR Part 200, commonly referred to as the Uniform Guidance (UG), governs most federal grants. Section 403 of Part 200 sets forth the allowability provisions for allowable costs, including that they be adequately documented. Condition: The City-Parish contracted with a certain vendor for two separate services under two separate contracts; one for event planning services for the Summer of Hope and one to manage and develop a youth workforce training program. The youth workforce contract services were to be performed for 3 months, at the same time as those for the Summer of Hope planning. The contract called for monthly payments to be made upon submission of invoices with adequate supporting documentation including an invoice, and/or monthly progress reports with summaries of tasks, and/or receipts, timesheets or consultant hours. Three invoices for payment of youth workforce development services totaling $36,420, contained only an invoice with no monthly progress reports or timesheets indicating activities performed. When contracts run simultaneously, this level of detail of activities, or lack thereof, may be considered inadequate documentation. This same vendor received shipments of merchandise purchased on a City-Parish purchase card as described in finding 2024-001. The contract is not clear on the party that is to bear the cost of this merchandise. Universe/ Population: The City-Parish paid for goods and services from approximately 160 contracted vendors as part of the SLFR program. Certain vendors were selected for audit procedures based on various of criteria. Effect: The City-Parish may not have properly enforced the terms of the contract prior to payment. Cause: Improper execution and design of established internal controls. Recommendation: Individuals involved with administering and monitoring grants and contracts should require all documentation be received from the vendor to ensure compliance with the contract prior to funds’ disbursement. View of Responsible Officials: The City-Parish transitioned the administration of the SLFR grant in the first quarter of 2025; therefore, we are unable to obtain direct clarification if there was other supporting documentation obtained but not included with the invoice. Moving forward, more detailed documentation will be required to substantiate payments and services rendered.

Procurement, Suspension and Debarment Questioned Costs: $1,071,477 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) (COVID-19) Grant No(s): N/A Criteria: Purchases made from federal grants must follow the procurement standards of Title 2 CFR sections 200.318 through 200.326 (the Uniform Guidance or UG). The Louisiana State public bid law must also be followed, which requires purchases of equipment greater than $60,000 should be made using the sealed bid method. Condition: The City-Parish purchased police vehicles in the amount $1,071,477 without undergoing the bid process. Universe/ Population: Seventeen contracts totaling $13,644,485 were subjected to compliance testing. Two contracts totaling $1,071,477 were found to be noncompliant. Effect: The City-Parish may be non-compliant with the purchasing requirements of the Uniform Guidance and the Louisiana State public bid law with respect to this purchase. Cause: Improper execution of established internal controls and a lack of adherence to policies. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. View of Responsible Officials: The Purchasing Director for the City-Parish has the authority as provided by the Code of Ordinances to approve emergency purchases upon review of the certification of the emergency by the user department. At the beginning of 2024, the Baton Rouge Police Department noted its patrol units were in less than standard conditions and a recent Police Academy graduating class of sworn officers compounded the need for viable units. At the same time, a nationwide supply chain crisis limited the availability of vehicles for purchase. Multiple quote requests from vendors across Louisiana confirmed a lack of available inventory including the Louisiana State Contract vendor as well as a piggyback contract for the Jefferson Parish Sheriff’s Office. After an exhaustive search, a single vendor was located who had an inventory of matching vehicles on hand for offer within a limited time frame. In an effort to not compromise public safety, an emergency purchase was utilized which was signed by both the Police Chief and the Purchasing Director. As required, notice was given by publishing in the newspaper. Final Auditor Comments: While the views above cite local ordinances, state statutes still apply and give definition to situations that qualify as an emergency. The conditions under which the purchase was made may not qualify as an emergency, as defined by La R.S. 38:2211. Furthermore, La R.S. 38:2212 requires the emergency to be certified by the public entity. Louisiana Legislative Auditor’s published legal guidance indicates that this certification is to be taken through a public meeting. There was no certification of the emergency in a public meeting.

Subrecipient Monitoring Questioned Costs: $961,671 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) (COVID-19) Grant No(s): N/A Criteria: According to the Uniform Guidance, subrecipients of federal funds must be monitored by the primary grant recipient to ensure compliance with federal statues, regulations and terms of the subaward. Condition: The City-Parish loaned $961,671 of SLFR funds in 2023 to a subrecipient under a loan agreement for $6,000,000 to develop affordable housing. The terms of the loan agreement call for the subrecipient to be in default of the agreement if progress is not made on the development according to a progress schedule contained in the loan agreement. According to the progress schedule, substantial completion was to occur in 2024 with initial occupancy in early 2025. The development has not progressed according to schedule, and no action has been taken to either amend the agreement or place the subrecipient/borrower into default. Universe/ Population: Of 8 subrecipients of the SLFR program, 6 were selected for testing. Of those selected, 1 subrecipient was found to be lacking with regard to monitoring. Effect: Untimely subrecipient monitoring could lead to City-Parish responsibility or liability for funds disbursed. Cause: While monitoring did occur in alignment with the development’s monitoring plan, the project did not progress to any new milestones in 2024 that would have triggered a draw request or submission of new monitoring documentation. According to the existing monitoring plan specified in the loan agreement, documentation requirements are structured around distinct project phases (Pre-construction, Construction, and Affordability) and correlate directly with milestone-based progress and payment requests. Since the developer did not submit any draw requests during this period or further progress on milestones, no additional monitoring documentation was required. This monitoring structure, based on milestone completion and cost reimbursement, meant that no new compliance checks or verifications were formally required in 2024 - despite informal oversight discussions and concerns about the project’s overall progress and viability. Going forward, enhanced formal documentation and escalation procedures will be implemented when material schedule deviations occur, even in the absence of payment activity, should the project proceed. Recommendation: The City-Parish should address the delayed status of the development and the impacts to compliance with the loan agreement. Actions such as amendments to the agreement or placement into default should be considered and executed. View of Responsible Officials: The City-Parish acknowledges that the development has not progressed in accordance with the schedule outlined in the original loan agreement with the developer for the Scotlandville Housing Development. At the time of the 2023 disbursement, documentation provided by the developer supported project readiness and anticipated completion timelines; however, subsequent review and monitoring activities identified delays tied to financing, site control, and design completion. At present, the administration is evaluating if it wants to proceed with the project and what contract amendments would be stipulated. The Office of Community Development, working alongside its grant management consultant CSRS, recently initiated a detailed review of the project status and supporting documentation. This review culminated in the identification of potential deficiencies, including unresolved site control issues and the need for updated construction plans. An updated site plan, ownership verification, environmental remediation documentation, and full construction package are being actively pursued, and the developer has been provided a prioritized list of immediate action items to remedy outstanding issues if the project is going to proceed. To bring the project and agreement into compliance, the corrective actions noted below are actively being pursued. These corrective actions are intended to either return the project to a viable status under the existing agreement or establish the necessary conditions to invoke appropriate default provisions should remediation fail. These corrective actions include: Formal reassessment of project viability with CSRS, OCD, and project leadership, including a meeting scheduled for the week of July 1, 2025; Issuance of a formal notice to the developer requesting documentation of progress and corrective actions related to site control, tax clearance, design completion, and permitting; Evaluation of amendment or enforcement actions under the agreement, including potential restructuring of the loan timeline or initiating default proceedings if satisfactory progress is not demonstrated by mid-Q3 2025; Preparation of an updated commitment letter from the current administration to support the developer’s financial closing, contingent on demonstrated progress and documentation clearance, if the administration chooses to move forward with the project.

Allowable Costs Questioned Costs: $53,585 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) (COVID-19) Grant No(s): N/A Criteria: Title 2 CFR Part 200, commonly referred to as the Uniform Guidance, governs the use of most federal grants. Those regulations require that costs be adequately documented and be reasonable and necessary. SLFR funds expended under the lost revenue category as described by the US Treasury’s Final Rule must be used for a government purpose. Condition: The City-Parish used SLFR funds to pay for certain P-card purchases that lacked documentation as to business purpose or invoice support (see finding 2024-001). Without the context of business purpose, the costs of $53,585 are difficult to assess for reasonableness and government purpose. Universe/ Population: These costs were part of the City-Parish’s Crime/Violence Prevention program whose total costs were approximately $3.2 million in 2024. $975,000 of these costs were subjected to allowable cost testing. Effect: The costs charged to the SLFR Program may be unallowable. Cause: Improper execution and implementation of internal controls. Recommendation: Program administrators should exercise discretion when incurring costs to be charged to a federal program to ensure that costs are reasonable, necessary and properly documented. View of Responsible Officials: The City-Parish transitioned the administration of the SLFR grant in the first quarter of 2025; therefore, we are unable to obtain direct clarification on the supporting documentation and reasonableness of the youth camps and travel costs. Moving forward supporting documentation will be attached to all P-card transactions as well as documentation to support the public purpose.

Allowable Activities & Costs, Procurement Questioned Costs: $737,375 and Subrecipient Monitoring Department of Health and Human Services 93.493 Community Funded Projects (BRIGHT) Grant No(s): H79FG000907 Criteria: Title 2 CFR Part 200, commonly referred to as the Uniform Guidance (UG), governs the use of most federal grants. Those regulations require that costs adhere to the terms and conditions of the grant, that costs be reasonable and necessary and subjected to a system of internal controls. Purchases of goods and services under $250,000 but greater than $10,000 should be made by obtaining quotations from an adequate number of vendors, and by consolidating purchases when economical. Subrecipients should be monitored. Condition: The City-Parish was awarded the grant for the purpose of establishing and running 5 trauma centers in Baton Rouge. However, while some of the grant costs were directed toward violence, drug abuse and counseling services, a significant portion could not be directly connected to a formally established trauma center. A significant portion of the grant funds paid for gathering type events, movie nights, fitness camps and activities of the Summer of Hope. The services were procured among approximately 30 vendors with contracts ranging from $10,000 to $160,900 which may have resulted in price inefficiencies. No evidence was provided that price quotations were obtained for the 17 vendors with contracts exceeding $10,000. Many of these same vendors were also contracted for services through the City-Parish’s Crime/Violence prevention sub-program funded through the State and Local Fiscal Recovery grant program. Two of the vendors were also hired for additional services not under formal contract; one to provide a movie day for $10,000 and one for $10,000 for health education and wellness promotional events. One subrecipient was employed by the grant program and it was not properly monitored. Finally, we noted charges from two vendors that appeared to duplicate charges made to SLFR grant program. Separate invoices submitted by each vendor for servicing family and youth showed time charges billed for the same dates and times that were previously billed to and paid by the SLFR program. The total duplicated charges total $46,045. Universe/ Population: As substantial portion of the Program’s costs, activities, and compliance requirements were subjected to testing among the various areas of the Compliance Supplement. The questioned costs represent the known questioned costs among the various compliance areas. Effect: The City-Parish is non-compliant with the Uniform Guidance and Program regulations. Without price comparisons, executed contracts, and appropriate monitoring of vendors and subrecipients, the City-Parish may have paid more than was necessary for the services procured. Cause: Improper design and implementation of internal controls over grants compliance. The persons administering the program may not have been properly trained in grants management and compliance. Recommendation: Internal controls should be established at all levels to ensure compliance. Only those trained in grants administration and Uniform Guidance should be placed in the role of program administrators. Views of Responsible Officials: The City-Parish transitioned the administration of the BRIGHT grant in the first quarter of 2025; therefore, we are unable to obtain some supporting documentation. The City-Parish provided documentation that a change in the project plan/scope from running five trauma centers to a variety of services based on needs and accessibility as opposed to confining them to centers was approved by the grantor agency through the programmatic reports which allowed expenses for gathering events, fitness camps, and activities for the Summer of Hope. This grant period ended September 27, 2024. Final Auditor Comments: Approval for the change in scope of activities should come by way of an amendment to the grant agreement signed by both parties.

Procurement, Suspension and Debarment Questioned Costs 14.218: $248,920 14.239: $1,172 Department of Housing and Urban Development 14.218 Community Development Block Grant 14.239 HOME Investment Partnership Program Grant No(s): B-21-MC-22-002,B-22-MC-22-002,B-23-MC-22-002,M-23-MC-22-0204 Criteria: Purchases made from federal grants must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 (the Uniform Guidance or UG). Purchases of services in excess of $250,000 should be made using one of two formal methods that are competitive and require public notice. Condition: The City-Parish paid for program management services in 2020 in the amount of $250,632 under a contract that has not recently undergone formal procurement methods. The purchases were made through amendment of an existing contract initially awarded using formal methods in 2019. Universe/ Population: These programs were not selected for audit as major programs. The contract relating to the costs were selected for audit in our general procurement compliance testing for all contracts, including those paid with federal and non-federal sources. Effect: The City-Parish may be non-compliant with the purchasing requirements of the Uniform Guidance with respect to this contract. Cause: Improper execution of established internal controls and a lack of adherence to policies. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. Views of Responsible Officials: The amendment in question did not constitute a material change in the scope, nature, or intent of the original procurement. The additional funding awarded was consistent with the original services solicited and did not involve new activities or substantially alter the deliverables or performance standards initially procured. As such, the amendment fell within the bounds of the original competitive process and was not required to be procured. The City-Parish procurement policy allows for amendments when they do not exceed the original scope of work or introduce fundamentally different services. The amendment was processed with full documentation of cost reasonableness, continued eligibility under the applicable grant program and internal approval. Therefore, we assert that the contract amendment was executed in accordance with both HUD and local procurement requirements and no formal procurement was necessary. To strengthen internal controls and ensure full alignment with federal procurement requirements, the OCD will document and reinforce internal procedures outlining when procurement is or is not required for amendments within the original scope. Procurement training is ongoing. The OCD staff will conduct refresher training with procurement and program personnel on contract amendment procedures and documentation requirements. Final Auditor Comments: It is acknowledged that similar services required under the initial contract are also to be provided under the amendments to the contract (grants management services). The original contract had a term of May 1, 2019 to April 30, 2022, at an amount not-to exceed $70,000, to perform grants management services for established HUD programs such as CDBG and HOME. However, amendments to this contract, made without being competitively bid (RFP), added administration services for the Emergency Rental Assistance Program undertaken in response to the COVID-19 pandemic. These amendments brought the total not-to exceed amount to $9,054,261 for all grant management services. While the Emergency Rental Assistance Program may have qualified for emergency procurement treatment, thereby not requiring competitive procurement, the HOME and CDBG program administration services may have been required to be competitively procured after the initial contract period ending April 30, 2022.

Allowable Costs and Activities Questioned Costs: $63,100 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: ERAP program guidance issued by U.S. Treasury indicates that grantees must have controls in place to ensure compliance with their policies and procedures and prevent fraud. Condition: The City-Parish ERAP Program has policies and procedures in place to prevent and detect fraud from occurring, and four instances of known fraud were self-detected through execution of those policies and procedures. The Baton Rouge Police department was notified and these matters were investigated. This is a repeat of finding 2022-003 in our prior year report. Universe/ Population: Approximately 16,000 applications have been processed by the program since the program’s inception in 2021. Thirteen cases of fraud have been identified to date, three of which were identified in 2023. These cases have been referred to law enforcement. Effect: The City-Parish’s ERAP program fell victim to known fraud totaling approximately $63,100 in 2023 and $153,000 since the program’s inception in 2021. Cause: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish’s policies and procedures detected the fraud as required by program guidance. Recommendation: The City-Parish should continue to follow its established policies and procedures for preventing, detecting and deterring fraud. We encourage further data analysis and investigation to allow for further detection of potential fraud. View of Responsible Official: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish's policies and procedures detected the fraud as required by program guidance. Additional restrictions were implemented to further protect the program from fraud including no longer allowing any exceptions to homestead, not allowing any single-room rentals, and requiring a landlord provide documentation of 3 months of rental payments/deposits—no handwritten receipts accepted. The City-Parish also sent an email blast out to applicants to ensure they understood the additional documentation requirements. Consultants for the City-Parish provided a fraud detection tip sheet to case managers, consolidating previously given guidance, to assist them in determining potential incidents of fraud. There have been no instances of suspected fraud since July 2023 due to these measures.

Allowable Costs Questioned Costs: $22,000 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Cost charged to federal grant programs, including the Coronavirus State and Local Fiscal Recovery Program, must be allowable according to the Program’s rules and subjected to an adequate system of internal control. Condition: The City-Parish disbursed funds to a non-profit organization administered by City-Parish staff to cover costs of community violence intervention activities. Approximately $22,000 of costs reimbursed to the non-profit were duplicated charges also paid by another City-parish grant to the non-profit. This payment and others were not subjected to an adequate system of internal control, as the payment process lacked appropriate segregation of duties, a vital component of internal control. Universe/ Population: Of a sampling of 40 separate cash disbursements selected from the program’s costs, 1 was made to the non-profit organization in the amount of $366,635 which included the underlying duplicate payments of $22,000. Total payments to the non-profit from the City-Parish were $1,018,115. Effect: The City-Parish has an overpayment to the non-profit organization that needs to be recouped. Additionally, without appropriate segregation of duties, funds are at higher risk for additional errors or even misuse. Cause: Improper design of internal controls. Recommendation: Individuals involved with administering the non-profit organization should not approve disbursement of funds on-behalf of the City-Parish. View of Responsible Official: After reviewing the condition, cause, and effect of the presented Finding, the City-Parish finds it important to clarify that the duplicative charges were initially identified and documented as a self-reported finding. This discrepancy was discovered during the subrecipient monitoring component of this award and was promptly reported and reconciled prior to being presented as an audit finding. Upon identification of the duplicative charges, totaling approximately $22,000, immediate corrective action was taken to address the non-compliance. Dated January 5, 2024, a memorandum was filed disclosing the duplicative reimbursements, documenting the actions taken to rectify these charges, and recommending further steps to enhance the internal controls of the non-profit organization. The following information summarizes the East Baton Rouge City-Parish American Rescue Plan Act (ARPA): Duplication of Benefits - Findings and Corrective Action Memorandum: This memorandum documents the incidental reimbursement of multiple duplicative items associated with the subrecipient’s grant agreement and the corrective actions undertaken to resolve these findings, ensuring compliance with the terms of this award. During the routine subrecipient monitoring reviews, it was discovered that duplicate reimbursements occurred for 12 items between separate federal awards (American Rescue Plan Act SLFRF and CARES Act). In accordance with 2 CFR 200.522(c), a corrective action plan was provided to resolve the non-compliance. To address this, the following actions were taken: 1) Reconciliation of Duplicate Reimbursements: The non-profit entity has since reconciled the total value of $22,222.98 in duplicate reimbursements with an equivalent value of eligible expenses, including all necessary backup documentation to satisfy existing procurement and reimbursement requirements. 2) Development of a Duplication of Benefits Policy: It was recommended that the non-profit entity develop a comprehensive duplication of benefits policy to strengthen their internal controls further. These additional safeguards are considered best practices and are intended to minimize the risk of future non-compliance. Additionally, a comprehensive, grant specific, financial management policy template was provided to support the non-profits action to adopt and implement an appropriate standard of internal controls. The City-Parish is committed to maintaining robust internal controls and ensuring compliance with federal regulations. Immediate corrective measures were proactively taken to address these duplicative charges. Additionally, the City-Parish's third-party grants manager has established recurring weekly monitoring meetings with the non-profit entity to support the development and implementation of an adequate system of internal controls. Continuous efforts are being made to improve these processes to prevent such issues in the future.

Procurement, Suspension and Debarment Questioned Costs: $729,080 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Grant recipients must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. Purchases of equipment greater than $250,000 should be made using the sealed bid method. Condition: The City-Parish purchased Ford Explorers in the amount $729,080 without undergoing the bid process. Universe/ Population: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Effect: Fourteen contracts totaling $24,633,089 were subjected to compliance testing. One contract for $729,080 was found to be noncompliant. Cause: The City-Parish has experienced turnover in the purchasing division in recent years. Recommendation: The City-Parish should strengthen controls to ensure all purchases undergo the appropriate competitive procurement processes. View of Responsible Official: Purchasing Department has implemented the following corrective actions to avoid this in the future: requisition checklist outlining guideline for compliance; creating standard operating procedure for purchase of vehicles for City-Parish Agencies; conduct routine departmental training; ensure that supervisor approvals prior to bid release.

Internal Controls over Project Costs Questioned Costs: Undetermined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Best practices in internal controls for construction projects suggests that application for payment be accompanied by architect certifications or construction site inspections by qualified personnel prior to payments to contractors or developers. Condition: The City-Parish does not require architect certifications prior to disbursement of funds for its HOME-funded housing projects under construction. Site inspections are conducted by City-Parish personnel, but they are inadequately documented and performed by office personnel. Universe/ Population: Our test of costs charged to the program included four projects involving construction or physical plant improvements. None of them had architect certifications. Effect: Without authoritative architect certification and/ or adequately documented site inspection, the City-Parish may be at risk of incurring unallowable or wasteful program costs. Cause: The Program believes the certifications are not required by the program and are not cost-beneficial given the relatively small size of their projects. Recommendation: Architectural certifications should be performed for construction projects. If the decision is to forego such certifications, then sections should be performed by qualified personnel and adequately documented. View of Responsible Official: Architect certification is not required by the Department of Housing and Urban Development nor our policies and procedures. It is listed in our contracts as one of the many different types of reimbursement documentation our office will accept. For many projects, an architect certification for each draw would be financially prohibitive and would likely reduce the financial viability of affordable housing developments. Our office does conduct intermittent on-site or desktop monitoring throughout the course of the project to ensure evidence activities. Additionally, all construction projects must complete permit requirements to ensure housing quality. Evidence of monitoring or activity was provided to the auditors.

Program Income Questioned Costs: $282,534 Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish’s primary HOME activities is the lending of funds for development of low-moderate income housing, single family home purchases and other purposes. These “soft secondary” loans are to be repaid in varying amounts and points-in time, depending on the development’s viability or borrowers’ ability to repay The City-Parish’s loan accounting process does not effectively demonstrate and ensure that all loan payments due and those collected were accounted for as program income. This is a repeat of finding 2022-011 in our prior year report. Universe/ Population: The City-Parish’s outsourced loan servicing company’s reports at year-end were compared to the program income in general ledger accounting records for the year. The reduction in the loan balances from 2022 to 2023 was $801,636 while program income shown as collected in the accounting records was $519,102, leaving an unaccounted-for difference of $282,534. Effect: The City-Parish may not be collecting all program income to which it is entitled which could result in fewer dollars for the program. Cause: The administration of the City-Parish’s HOME Program was in transition during 2023. Recommendation: To ensure completeness of loan collections received, the City-Parish should reconcile the change in loan balances to collection reports produced by the loan servicer and to program income in the general ledger. Overages and shortages should be thoroughly pursued View of Responsible Officials: The Office of Community Development utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD by the loan service agency monthly for staff approval. The OCD staff then reconciles this income monthly and submits the monthly report to the Finance Department for processing. Loan balances are not only altered by program income but also through loan forgiveness offered to low-to-moderate income residents. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD before being executed by the Parish Attorney’s Office to provide multiple layers of review. Case files are maintained at the OCD and documentation of monthly reconciling has been provided along with an accounting ledger. The OCD is working to improve monthly reconciling templates to include incurred fees from the loan servicing agency as well as forgiveness events to provide an accurate gross revenue

Special Tests and Provisions Questioned Costs: N/A Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): All grants identified on the Schedule of Expenditures of Federal Awards as HOME ALN #14.239 Criteria: During the period of affordability (i.e., the period for which the Nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction (City-Parish) must perform on-site inspections to determine compliance with property standards and verify the tenant occupancy information submitted by the owners. Additionally, these subrecipients must be monitored. Condition: The City-Parish has not performed the on-site inspections for, or adequately monitored, the affordable housing developments it has funded, as required. Additionally, the developments that are subject to on-site inspections have not been scheduled or planned. This is a repeat of finding 2022-012 in our prior year report. Universe/ Population: Of approximately 25 developments funded over the last several years and presumably within the period of affordability, none were site inspected and none were scheduled for site inspection/monitoring. Effect: The City-Parish’s HOME Program may be non-compliant with the program requirements that ensure housing quality and accessibility for targeted participants. Cause: The administration of the City-Parish’s HOME Program was in transition during 2023. Recommendation: The City-Parish should prioritize the planning, scheduling and execution of site monitoring for HOME funded developments in accordance with the program regulations. Additional human resources (internal or external) may be needed. View of Responsible Officials: The responsibility to monitor projects in the affordability period recently transferred to the City-Parish. However, our office has had insufficient capacity thus far to inspect all projects within their 20-year affordability period. We have prioritized inspection of projects currently under construction to ensure that our office can continues to meet our community’s affordable housing needs. Our team has worked diligently with the Finance Department, the Human Resources Department, and the Mayor-President’s Office to create an expanded organizational chart and capacity plan. That plan was approved by the EBR Metro Council earlier this year and hiring activities are ongoing. Simultaneously, we have procured additional consultant support to provide technical expertise throughout this monitoring.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee’s time for each pay period. Condition: Out of 20 employees’ time sheets/paychecks tested, 10 lacked supervisor approval. Universe/ Population: For a sample of 20 payroll charges totaling $25,786, we attempted to observe timesheets and their supervisory review to determine if proper internal controls were in place. Effect: Although further audit procedures indicated that the 10 employees’ costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of time sheet review and approval of a supervisor was not consistently maintained during the fiscal year. Recommendation: The WIOA (Employ BR) program should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: To improve the accuracy and timeliness of payroll processing, a revised payroll procedures manual will be developed and disseminated to all staff responsible for time approval. Additionally, mandatory training on the ExecuTime system will be conducted for these staff members to ensure they have the necessary skills for proper and timely time sheet approvals.

Allowable Costs Questioned Costs: N/A Department of Labor 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Program (DW) Grant No(s): AA-36322-21-55-A22, AA-38532-22-55-A-22 Criteria: Program regulations state that tuition and educational benefits are to be disbursed on behalf of eligible recipients through the use of individual training accounts (ITA 's) established for each recipient. The local WIOA Board designed the program to employ the use of these accounts and has set account limit for each individual at various limits ranging from $10,000-$20,000. The Program should have an accounting system that ensures proper posting and tracking of ITA transactions and balances. Condition: The Program's administration’s process for tracking and accounting for program benefits through ITA’s is manual, kept in paper files, and is not reconciled to official accounting records of the City-Parish. Universe/ Population: A sampling of 25 participants among a population of 122 were selected for testing. Of the 25 tested, all participants’ ITA accounts were tracked through this manual process. Effect: The Program could potentially pay an amount in excess of the participant's allotted amount and be unaware of the overpayment. Cause: Transition of employees and administration have led to continuation of dated processes. While manual records may sometimes be adequate, they can be inefficient and prone to error. Recommendation: We recommend an electronic system to account for the ITA’s, such as a spreadsheet that is reconciled to the accounting system, or directly into the City-Parish’s accounting system with a project or other code. View of Responsible Official: To improve the accuracy of ITA tracking, a revised ITA tracking system will be implemented. This will include data entry fields to capture all necessary information for each ITA payment, minimizing errors and omissions. Reconciliation with MUNIS on a monthly basis to identify any discrepancies. Additionally, mandatory training on the revised ITA Tracking system will be conducted for relevant staff members to ensure continuity.

2022-002) Reporting Questioned Costs: N/A Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: Financial and performance reports filed with granting agencies must be filed timely in accordance with program regulations and guidance and financial amounts must be supported by the accounting records. The ERAP 1 and ERAP 2 Programs require the filing of monthly and quarterly reports to include various information, including dollar amounts of assistance paid, number of households served, and other information. Condition: The City-Parish did not file all of the required monthly reports for ERAP 2. Furthermore, the financial amounts within both the monthly and quarterly reports were lacking in support from the accounting records of the City-Parish. This is a repeat of finding 2021-002 in our prior year report. Universe/ Population: Of twelve required monthly filings, we selected 12 months for the purpose of determining the timeliness of filing and to determine whether amounts were materially accurate and supported by the accounting records. Of the twelve required filings, six of the reports were not filed, and the six that were filed lacked support of the accounting records. Two of the eight quarterly reports (4 for ERAP 1 and 4 for ERAP 2) were subjected to audit. Neither of the reports selected for audit were filed timely and both included amounts that could not be supported by the accounting records. Effect: The amounts of assistance and other programmatic data may be reported inaccurately to the grantor, in this case, the United States Treasury. Cause: The City-Parish?s Finance Department was not sufficiently involved in the preparation and/or review of the monthly and quarterly reports. Recommendation: The monthly and quarterly reports should be prepared, or at least reviewed, by the City-Parish Finance Department to ensure the financial amounts reported agree to the accounting records. Also, the City-Parish?s procedures for preparing, reviewing, and filing financial reports should be revisited so they effectively ensure accurate and timely reporting to granting authorities. View of Responsible Official: The Office of Community Development (OCD) was in contact with the Treasury to resolve an error with the Treasury reporting portal that prevented report submission. The error was not resolved by Treasury until June 2022. The monthly report requires reporting of the number of households that received assistance and the total amount of ERAP funds paid for those participants in the reporting period. A City-Parish contractor issues the rental assistance and requests reimbursement from the City-Parish at a later date. The Treasury reports are due prior to the reimbursement being paid to the contractor. However, costs for the participants must still be included in the Treasury Report. Due to this timing difference, the monthly report would not be supported by the City-Parish accounting records at the time of the report being filed.

2022-003) Allowable Costs and Activities Questioned Costs: $37,009 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: ERAP program guidance issued by Treasury indicates that grantees must have controls in place to ensure compliance with their policies and procedures and prevent fraud. Condition: The City-Parish ERA Program has policies and procedures in place to prevent and detect fraud occurring in the ERAP, and four instances of known fraud were self-detected through execution of those policies and procedures. The Baton Rouge Police Department was notified and these matters were investigated. Universe/ Population: Approximately 15,000 applications have been processed by the program since the program?s inception in 2021. Four cases of fraud identified in 2022 have been referred to law enforcement and an additional six cases were reported in the prior year. Effect: The City-Parish?s ERAP program fell victim to known fraud totaling approximately $37,009 in 2022 and $90,000 since the program?s inception in 2021. Cause: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish?s policies and procedures detected the fraud as required by program guidance. Recommendation: The City-Parish should continue to follow its established policies and procedures for preventing, detecting and deterring fraud. We encourage further data analysis and investigation to allow for further detection of potential fraud. View of Responsible Official: The OCD has policies and procedures in place to prevent and detect fraud in the ERAP and will continue to follow its established policies and procedures. In addition, the ERAP has updated its program guidelines to forbid the provision of rental assistance to any single-family home rentals where the landlord holds homestead exemption. Any other single-family rentals owned by an individual will need to provide proof of payment and receipt of three months of rental assistance via cancelled checks or bank statements. This rule is being implemented due to evidence that most fraud cases involve single-family home rentals owned by individuals.

2022-004) Allowable Activities Questioned Costs: $612,283 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Activities funded by the program must satisfy the eligibility requirements of the Treasury?s Final Rule which outline four broad categories of use in responses to the global pandemic: 1) replacement of lost revenue; 2) public health and negative economic impacts; 3) premium pay for essential workers; and 4) sewer, water and broadband infrastructure. Furthermore, guidance issued by the Treasury (frequently asked questions dated 4/10/2023, question 4.2) suggests that outside of the revenue loss category, road and bridge constructions may not meet the eligibility requirements of the Final Rule. Condition: The City-Parish used funds to replace the Twin-Oaks bridge. This activity may not be an allowable activity. The costs incurred for this project in 2022 was $612,283. Universe/ Population: Of 40 separate cash disbursements tested, 1 was found to be of questionable compliance. Effect: The City-Parish?s bridge replacement project may not have been an allowable use of program funds. Questioned costs of $612,283. Cause: The City-Parish may have an overly broad interpretation of the Final Rule when determining allowable projects and activities. Additionally, we found that the process for determining allowable projects lacks formality, documentation, and a trail of accountability. Recommendation: The City-Parish should follow the Final Rule and associated guidance. If proposed projects and activities lack clear guidance, the justifications should be thoroughly explained, documented and approved through signature by appropriate personnel. View of Responsible Official: After reviewing the project scope, along with the U. S. Treasury Final Rule, the City-Parish believes that the bridge replacement is an allowable use of funds. Twin Oaks bridge was closed in 2015 in a very rural area. During the pandemic it became evident that citizens were unable to access healthcare quickly with the bridge closure. In addition, the bridge is causing major drainage issues in the Baker Canal. The replacement bridge will use watertight expansion joints so that all surface water can drain off the structure and collect in inlets placed at the bridge ends. The downstream ends of bridges need special attention which will collect and concentrate the stormwater away from the bridge. The concentrated flow will be directed into a low-risk erosion area. All runoff shall be directed away from wing walls, fill slopes, and embankments, so that no material is susceptible to erosion. Bridge drains are designed to reduce the amount of concentrated flows off a structure. The replacement of the bridge allows the Parish to address the subsurface drainage issues as well as respond to the public health and negative economic impacts of the pandemic.U.S. Treasury has specifically enumerated the flexibility provided under this expenditure category in the Final Rule excerpt: (second paragraph on the page 4411) ?Although the meaning of water and sewer infrastructure for purposes of sections 602(c)(1)(D) and 603(c)(1)(D) of the Social Security Act does not include all water-related uses, Treasury has made clear in this final rule that investments to infrastructure include a wide variety of projects. Treasury interprets the word ``infrastructure?? in this context broadly to mean the underlying framework or system for achieving the given public purpose, whether it be provision of drinking water or management of wastewater or stormwater. As discussed below, this can include not just storm drains and culverts for the management of stormwater, for example, but also bioretention basins and rain barrels implemented across a watershed, including on both public and private property, that together reduce the amount of runoff that needs to be managed by traditional infrastructure.?

2022-005) Allowable Costs Questioned Costs: $ 522,000 Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Program (SLFR) Grant No(s): N/A Criteria: Cost charged to federal grant programs, including the Coronavirus State and Local Fiscal Recovery Program, must follow the Uniform Guidance (UG), subpart E. Salaries and benefits charged must meet the documentation standards of 200.430 by supporting the distribution of costs for employees working on more than one activity. Condition: The City-Parish lacked documentation to support the distribution of salaries and benefits for employees that worked on SLFR activities as well as non-SLFR activities. Universe/ Population: Of a sampling of 24 separate employee payroll charges, defined as an employee?s gross pay for a payroll period, 6 were charged to the Environmental Division of the City-Parish, and all 6 failed to meet the time distribution requirements of 200.430. The non-compliance appears to be limited to this division. Effect: The City-Parish may be non-compliant with the regulations for payroll and benefit costs of the Environmental Division that were charged to the SLFR resulting in questioned costs $522,000. Cause: The division?s administrators were unaware of the requirements of the UG subpart E 200.430. Recommendation: All divisions involved in administering federal programs should be advised and trained in the payroll documentation requirements of the UG. View of Responsible Official: In an effort to avoid non-compliance with the federal grant program, all employee payroll charges will be transferred to an alternative City-Parish funding source. If a federal grant program is used in the future for employee payroll charges, the employees will be trained on the applicable federal guidelines prior to use.

2022-006) Reporting Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: A performance report, the CAPER, is required to be filed annually. The report was not filed. This is a repeat of finding 2021-006 in our prior year report. Universe/ Population: The one CAPER that was required to be filed (2021 program year) was selected for testing, however, it was not filed. Effect: The City-Parish may be in violation of the reporting requirements for this grant. Cause: The City-Parish transitioned the program?s administration during 2022. Another reason for the non-filing was that challenges with HUD?s filing portal continue. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: the City-Parish transitioned the administration of the Office of Community Development (OCD) in late 2021 throughout 2022. The staff requested access to the Department of Housing and Urban Development?s online reporting system, the Integrated Disbursement and Information System (IDIS) in order to complete the CAPER. The OCD staff did not receive access to IDIS until January 2023, at which time the OCD staff began working to complete the reports. The 2022 program year report was completed in June 2023. Moving forward, the new administration at the OCD is redesigning the reporting system for subrecipients and developers to increase the efficiency and accuracy of reporting. The new system should reduce staff burden and reduce the impact of staff transitions on reporting requirements in the future.

2022-007) Internal Controls for Allowable Costs Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grant numbers identified on the Schedule of Expenditures of Federal Awards as CDBG ALN #14.218 Criteria: Section 200.303 of the Uniform Guidance requires grant recipients to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. A key part of internal controls is knowledge and training of those individuals responsible for compliance in the cost principles, subpart E of the Uniform Guidance. Condition: Those responsible for administration of the CDBG entitlement grant are not fully trained in all of the aspects of the Uniform Guidance. Universe/ Population: Not applicable, the audit procedure detecting this condition did not involve transactional testing. Effect: The City-Parish?s internal controls might not detect and prevent unallowable costs to the programs. Cause: The City-Parish transitioned the CDBG program?s administration during 2022. Recommendation: Those responsible for grants administration and compliance should be fully trained in the cost principles of the Uniform Guidance. View of Responsible Officials: The City-Parish transitioned the administration of the OCD in late 2021 throughout 2022. The new leadership self-identified the need for additional staff training, coaching, and technical assistance and began to invest in individual development plans for all program administrators and analysts. While additional training can only improve knowledge of the Uniform Guidance and reduce the likelihood of internal controls not detecting and preventing unallowable costs to the programs. The OCD provided a sample of reimbursements to the auditors for transactional testing which indicated that no unallowable activities were permitted in 2022. The Office of Community Development had self-identified opportunities for certain process improvements for internal controls to detect issues in backup documentation. The City-Parish procured a software that will serve as the system of record and is currently implementing that new software. Moving forward, the OCD team will have the systems in place to assess, reject, and approve the documentation required from subrecipients more thoroughly and efficiently.

2022-008) Davis Bacon Wage Requirements Questioned Costs: Undetermined Department of Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): B-18-MC-22-0002 Criteria: Contracts and subcontracts involving construction activity with CDBG funds are subject to the Davis-Bacon prevailing wage requirements. As such, the City-Parish, as grantee, must monitor its subrecipients with construction activity to ensure that the subrecipient is monitoring the construction contractors for Davis Bacon prevailing wage requirements. Condition: The City-Parish did not sufficiently monitor its subrecipients to ensure their monitoring of contractors? compliance with Davis Bacon wage requirements. Universe/ Population: Two construction projects occurred in 2022 that were carried out through subrecipients. One of the two subrecipients was not monitored to ensure compliance with their Davis Bacon responsibilities. Effect: The City-Parish is non-compliant with the requirements to monitor its subrecipients with respect to Davis-Bacon compliance. Cause: The administration of the City-Parish?s CDBG Program was in transition during 2022. Recommendation: The City-Parish should develop a process to ensure its subrecipients are monitoring Davis Bacon compliance on their construction contracts. View of Responsible Official: All OCD contracts with developers include requirements to comply with Davis-Bacon. As part of the approved policies and procedures, the OCD requests evidence of Davis-Bacon compliance during the closeout of the project in order to ensure complete records. The OCD withholds the retainage at the end of the project until those records are received and reviewed as part of project close-out. The project cited for a lack of Davis-Bacon monitoring began the close-out process just as the audit was being finalized in June 2023 and per the OCD policy, the final reimbursement to the developer is being held until complete Davis Bacon records are submitted, reviewed, and approved. To implement best practices moving forward, the OCD is reviewing the policies and procedures and identifying ways to improve the collection and review of Davis-Bacon compliance. The current staff is scheduled to participate in training and is developing new reporting requirements in alignment with that training.

2022-009) Program Income Questioned Costs: Undetermined Department of Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): B-21-MC-22-0002, B-22-MC-22-0002 Criteria: Program income includes payments received from principal and interest on loans made with CDBG funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the CDBG program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish?s CDBG program activities is the lending of funds for development of low-moderate income housing and other purposes. These ?soft secondary? loans are to be repaid in varying amounts and points-in time, depending on the development?s viability or borrowers? ability to repay. The City-Parish?s loan accounting process does not effectively demonstrate and ensure that all loan payments due and those collected were accounted for as program income. Universe/ Population: The City-Parish?s outsourced loan servicing company?s reports at year-end were compared to the program income in general ledger accounting records for the year. The reduction in the loan balances from 2021 to 2022 was $180,776. These net loan reductions for the year were not reconciled with program income recorded in the general ledger. Effect: The City-Parish may not be collecting all program income to which it is entitled which could result in fewer dollars for the program. Cause: The administration of the City-Parish?s CDBG Program was in transition during 2022. Recommendation: The City-Parish should reconcile the change in loan balances to collection reports produced by the loan servicer and to program income in the general ledger. Loans forgiven should be factored into the reconciliation as well. View of Responsible Official: The OCD utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD by the loan service agency monthly for staff approval. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD and the Office of the Mayor-President before being executed by the Parish Attorney?s Office to provide multiple layers of review. Case files are maintained at the OCD. Documentation of monthly reconciling has been provided along with an accounting ledger, but we acknowledge that this process could be improved. The OCD is working to develop additional internal controls and will evaluate the current loan service agency?s effectiveness at managing the portfolio.

2022-010) Program Income Questioned Costs: Undetermined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish?s primary HOME program activities is the lending of HOME funds for development of low-moderate income housing. Loans are to be repaid in varying amounts and times depending on the development?s viability and borrowers? ability to repay. The City-Parish has not included loans issued for recent housing development projects (since 2018) within the accounting and loan collection system with the outsourced company. Universe/ Population: Of approximately ten projects tested over past audit cycles and five new projects in 2022 that received HOME assistance in the form of loans, none of their balances appeared on the loan accounting ledger of the City-Parish. Effect: While some of these loans may not yet be to the point of payment, the City-Parish is nonetheless at risk for not collecting all program income if its loans are not added to the loan accounting ledger and accounted for properly, monitored, and serviced. Additionally, the City-Parish could be deficient in its ability to hold borrowers/developers accountable for on-going compliance. Cause: The administration of the City-Parish?s HOME Program was in transition during 2022. Recommendation: The City-Parish should contact its outsourced loan servicing company and include its recently issued HOME Multi-Family loans in its loan accounting, collection and reporting processes. View of Responsible Officials: The Office of Community Development (OCD) provides funding to affordable housing developers using Federal funds. Since 2021, the OCD has worked alongside dozens of developers, the State, and private investors to add over 800 units of affordable housing to our housing market. These affordable housing funds are often provided to nonprofits and local developers by means of a forgivable loan. This loan is intended to generate no income, but instead allows the City-Parish to place a lien on the property to enforce the long-term affordability requirements required by the Federal government.The outsourced loan servicing agency provides administrative support for the HOME mortgage program and interest generating activities; however, the affordable housing support is not a part of that scope. Instead, the City-Parish Parish Attorney?s Office works alongside the Office of Community Development and the Clerk of Courts to record the forgivable loans as liens on the property. The lien ensures that developers are unable to sell the home for market rate activities or otherwise dispense of the property or manage the property in a way that is incompliant with the Code of Federal Regulations.

2022-011) Program Income Questioned Costs: Undetermined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish?s primary HOME activities is the lending of funds for development of low-moderate income housing, single family home purchases and other purposes. These ?soft secondary? loans are to be repaid in varying amounts and points-in time, depending on the development?s viability or borrowers? ability to repay The City-Parish?s loan accounting process does not effectively demonstrate and ensure that all loan payments due and those collected were accounted for as program income. Universe/ Population: The City-Parish?s outsourced loan servicing company?s reports at year-end were compared to the program income in general ledger accounting records for the year. The reduction in the loan balances from 2021 to 2022 was $1,509,024 while program income was $823,325, leaving an unaccounted-for difference of $685,699. It is acknowledged that some of the difference could be attributable to forgiven loans. Effect: The City-Parish may not be collecting all program income to which it is entitled which could result in fewer dollars for the program. Cause: The administration of the City-Parish?s HOME Program was in transition during 2022. Recommendation: The City-Parish should reconcile the change in loan balances to collection reports produced by the loan servicer and to program income in the general ledger. Loans forgiven should be factored into the reconciliation as well. View of Responsible Official: The OCD utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD monthly for staff approval. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD and the Office of the Mayor-President before being executed by the Parish Attorney?s Office to provide multiple layers of review. Case files are maintained at the OCD. Documentation of monthly reconciling has been provided along with an accounting ledger on the change in the loan balance in 2022 as caused by escrow support and loan forgiveness activities for low to moderate income residents, but we acknowledge that this process could be improved. The OCD is working to develop additional internal controls and will evaluate the current loan service agency?s effectiveness at managing, reconciling, and providing reports on the portfolio.

2022-012) Special Tests and Provisions Questioned Costs: N/A Department of the Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): All grants identified on the Schedule of Expenditures of Federal Awards as HOME ALN #14.239 Criteria: During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME assisted rental housing, the participating jurisdiction (City-Parish) must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. Condition: The City-Parish has not performed the on-site inspections for the affordable housing developments it has funded, as required. Additionally, the developments that are subject to on-site inspections have not been scheduled or planned. Universe/ Population: Of approximately 20 developments funded over the last several years and presumably within the period of affordability, none were site inspected and none were scheduled for site inspection. Effect: The City-Parish?s HOME Program may be non-compliant with the program requirements that ensure housing quality and accessibility for targeted participants. Cause: The administration of the City-Parish?s HOME Program was in transition during 2022. Recommendation: The City-Parish should prioritize the planning, scheduling and execution of site monitoring for HOME funded developments in accordance with the program regulations. Additional human resources (internal or external) may be needed. View of Responsible Official: The City-Parish transitioned the administration of the OCD in late 2021 and began hiring new staff throughout 2022. As the Office of Community Development onboarded staff in 2022, monitoring of affordable housing projects, previously conducted by the East Baton Rouge Parish Redevelopment Authority, had resumed. Additionally, the new leadership self-identified the need for additional monitoring and procured a consultant to provide a comprehensive third-party monitoring and assessment of all active subrecipients and developers. That review is anticipated to be completed in July of 2023.

2022-013) Reporting Questioned Costs: N/A Department of the Health and Human Services 93.600 HeadStart Cluster Grant No(s): 06CH01155403 Criteria: Financial and performance reports filed with granting agencies should be submitted timely and be subjected to internal controls to ensure accuracy and completeness. Condition: The SF-429 was not filed timely for 2022. The SF-429 Report is required to be submitted 30 days after year-end similar to the SF-425 Annual Report. City-Parish submitted the report on May 18, 2023, which exceeds the required timeframe. Universe/ Population: The Annual SF-429 is required to be filed and the population consisted of the one annual report Effect: The City-Parish may be non-compliant with the reporting requirements for this grant. Cause: The Head Start program?s regulations were relaxed during the COVID-19 pandemic. Resumption of filing procedures was slower than anticipated. Recommendation: All required grant reports should be filed extensions or correspondence reprieving the filing responsibilities because of external barriers should be sought and maintained. View of Responsible Officials: The Head Start Program Administrator began working with Grants Management Solutions in December 2022 to obtain authorization to submit the report timely in Grants Management. After many conversations, the error by Grants Management Solution was resolved in May 2023 and the report was submitted and certified.

2022-014) Allowable costs Questioned Costs: $55,464 Department of the Health and Human Services 93.600 HeadStart Cluster Grant No(s): 06CH01155403 Criteria: The Uniform Guidance section 200.403 set forth general criteria for allowability, which include the requirement for costs to be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Condition: Costs of the City-Parish?s centralized risk management function, specifically those for general liability, professional liability and unemployment were charged and allocated to Head Start?s indirect costs pool. Insurance premiums for policies covering those risks were also charged as direct costs. Universe/ Population: The indirect cost pool used in determining the Program?s indirect cost rate for 2022 was derived from a prior year?s actual costs and amounted to $1,369,701, of which $82,036 was determined to be unallowable. Effect: The unallowed costs to HeadStart for 2022 resulting from the inclusion of the unallowed risk management cost in the indirect cost rate pool amounted to $55,464. Cause: This appears to be the result of an oversight error. Recommendation: All costs included in the indirect cost pools for allocation should be thoroughly reviewed by accounting and program personnel to ensure that the same type costs are not charged as both direct and indirect to federal programs. View of Responsible Officials: In developing the Cost Allocation Plan, the City-Parish previously excluded risk management costs in the calculation of the rate for the Head Start program. When the City-Parish began utilizing a new consultant to prepare the Cost Allocation Plan, the consultant included those costs in the rate calculation when they should have been excluded. The 2023 report will be revised to exclude costs for risk management functions and will continue to be excluded for future plans. The City-Parish does not charge the full amount of indirect costs that would be allowable based on the approved indirect cost rate to the grant programs that paid for the insurance policies. In 2022, the indirect cost allowable based on the approved rate was $1,410,223.04; however, only $131,232.00 was directly charged to the Head Start grant and $955,904.84 was used as in-kind match leaving a balance of $323,086.20 in allowable indirect cost that was not charged.

2021-001) Allowable Costs Questioned Costs: $14,842 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: The ERAP Program allows for payment of rental assistance for amounts up to the monthly rent paid by the applicant tenant. The statute establishing the ERAP requires that payments not be duplicative of any other federally funded rental assistance. Condition: The City-Parish provides rental assistance to individuals and families through its Community Services Block Grant (CSBG) as well as through the ERAP and it is not unusual for individuals to participate in more than one program. However, benefits (months) cannot be duplicated. In comparing CSBG participants and benefits (by month) received to those of the ERAP, we noted a duplication of monthly rent payments totaling $14,842. We verified that these duplicated benefits did not include utility payments Universe/ Population: In a comparison of participants data files of both programs, approximately 100 applicants were noted as participating in both programs. A sampling of 25 of those common participants were reviewed to determine if duplicate month?s rent were paid. 9 of the 25 sampled participants were paid for the same months? rent. Effect: Rental assistance benefits were duplicated among these programs. Cause: The City-Parish addressed duplication of benefits between these programs, however, these individuals received benefits anyway. Internal controls may not have been effective. Recommendation: The City-Parish and its contracted program administrator should enhance its review process to ensure that participants in the CSBG and other Federal programs are not duplicating the months requested for rental assistance. View of Responsible Official: The U.S. Treasury recommended self-attestation of duplication of benefits. However, program administrators went beyond this minimum requirement. A check was performed using data from the State of Louisiana, subrecipients operating rental assistance programs, and the Division of Human Development and Services (DHDS) CSBG assistance program. A list of all applicants was submitted to DHDS for verification. The applicants identified as having received duplicative assistance were not identified as having received assistance from the DHDS assistance program. Office of Community Development (OCD) will work with DHDS to identify which program will require a repayment. DHDS will conduct cross verification with OCD program assistance records prior to the issuance of CSBG assistance awards.

2021-002) Reporting Questioned Costs: N/A Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: Financial and performance reports filed with granting agencies must be filed timely in accordance with program regulations and guidance and financial amounts must be supported by the accounting records. The ERAP 1 and ERAP 2 required the filing of monthly reports to include various information, including dollar amounts of assistance paid and number of households served. Condition: The City-Parish did not file most of its monthly reports for ERAP 2. Furthermore, the financial amounts within both the monthly and quarterly reports were not supported by the accounting records of the City-Parish. Universe/ Population: Of fourteen required monthly filings, we reviewed all of them for timely filing, and two of them for ensuring that financial amounts agreed to accounting records. Of eight quarterly filings, we reviewed all of them for timely filing, and four of them for ensuring that financial amounts agreed to accounting records. Effect: The amounts of assistance and other programmatic data may be reported inaccurately to the grantee, in this case, the U.S. Treasury. Cause: The City-Parish?s Finance Department was not sufficiently involved in the preparation and/or review of the monthly and quarterly reports. Recommendation: The monthly and quarterly reports should be prepared, or at least reviewed by the City-Parish Finance Department to ensure the financial amounts reported agree to the accounting records. View of Responsible Official: The Office of Community Development (OCD) submits the reporting file to Finance upon receipt from the Treasury. City-Parish Finance staff gathers all financial data for the quarterly reporting, enters the data into the report file and resubmits to OCD staff / contractors for submission through the Treasury website. Due to continuous changes and difficulty reporting with the Treasury?s system, the reports submitted for review by the auditors do not accurately pull information from the Treasury reporting website. The OCD staff and contractors will work closer with Finance not only to gather the financial data needed for the report but also upon final submission of the report to the Treasury to review for accuracy.

2021-003) Allowable Costs and Activities Questioned Costs: N/A Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: For ERAP 1, a grantee may use up to 10 percent of the total award amount for direct and indirect administrative costs and up to 10 percent of the total award for the costs of housing stability services. Accounting records and internal controls should be designed to ensure compliance with these cost limitations. Condition: We identified certain administrative costs that were not properly charged to the accounting records that identify and account for administrative costs. Universe/ Population: The administrative costs accounted for in the City-Parish?s accounting system totaled $3,019,190. Which consisted of $2,555,266 of ERAP 1 and $463,924 of ERAP 2. Total program costs were $34,410,523. Miscoded administrative costs of approximately $75,000 were identified. Effect: While the City-Parish appears to be compliant with the limitation for administrative costs, the improper coding of such costs to the accounting records could affect the City-Parish?s ability to monitor administrative costs for compliance with the 10 percent limit. Cause: The start-up nature of the program led to this internal control deficiency over the monitoring of administrative costs. Recommendation: Controls should be implemented to program costs to ensure they are properly coded. View of Responsible Official: City-Parish will establish additional reviews to ensure that invoices are coded properly prior to processing payments which will ensure compliance with the administrative and housing stability service costs limitations.

2021-004) Cash Management Questioned Costs: None Department of Homeland Security 97.029 Flood Mitigation Assistance Program Grant No(s): FMA-PJ-06-LA-2019-004 Criteria: Uniform Guidance Sub-Part D sets the general rules for ensuring compliance with the Cash Management Act. The Flood Mitigation Assistance Program regulations as administered through the Louisiana Governor?s Office of Homeland Security (GOHSEP) further define the rules for cash management of costs as it relates to disbursements for cash advances. LAHM guidance states the ?applicant has 45 working days to submit cancelled check? to demonstrate project closeout after receipt of the advance. Condition: The City-Parish did not adhere to the timeline for disbursement of funds for one (1) of its advances from the Governor?s Office of Homeland Security (GOHSEP). In this instance (of those evaluated), a property acquisition that utilized grant funding exceeded the allotted time allowed for project closeout related to advance payments. The time between MOHSEP/The City-Parish receiving the funds and remitting the cancelled check as proof of payment to GOHSEP exceeded the ?45 working days? as stated by LAHM guidance related to payment processing over advances. Universe/ Population: The universe/population was twenty-four (24) items (projects) tested for cash management compliance. Effect: With respect to the identified transactions, the City-Parish is non-compliant with the rules regarding minimization of time that Federal cash is held. Cause: Lack of internal controls to ensure timely closeout. Recommendation: The City-Parish should develop procedures and controls to ensure compliance with the program?s rules for timely disbursement of funds. View of Responsible Official: MOHSEP has adjusted their procedures prior to the audit to only request reimbursement once the Parish Attorney requests checks for closing. Prior to this, reimbursements were requested as soon as the offer was accepted by the homeowner. This created an issue when the homeowner requested a delay in the closing. Requesting reimbursement only when closing is imminent will prevent this delay in remitting the cancelled checks to GOHSEP. MOHSEP procedures were adjusted to request acquisition reimbursements when the property has been scheduled for closing by the Parish Attorney?s Office. The reimbursement requests will be initiated when the Parish Attorney?s Office notifies MOHSEP of the impending closing.

2021-005) Reporting Questioned Costs: N/A Department of the Transportation 20.106 Airport Improvement Program Grant No(s): 3-22-0006-112-2018 ? for the SF ? 425. Criteria: Financial and performance reports of Federal programs must be filed timely and adhere to other transparency requirements in accordance with program regulations and guidance. Condition: Although the City-Parish prepared and submitted the SF-425 report, the report was not submitted timely. Universe/ Population: Three types of reports are required to be submitted annually. The SF-425 Federal Financial Report is required to be submitted for each open AIP grant for a total of nine (9) in the current year. The other two reports, FAA 5100-126 and FAA 5100-127, are required to be submitted for the AIP as a whole annually, for a total of two (2) reports. The total universe/population for reports submitted in 2021 was eleven (11). Effect: The City-Parish may not be adhering to all reporting and transparency requirements of the program. Cause: This appears to be an administrative oversight. Recommendation: The City-Parish should review applicable guidance and as it relates the timely submission of required reports. View of Responsible Official: The Greater Baton Rouge Airport District has prepared and filed the SF-425 Federal Financial Reports. However, documentation of a timely submittal is not available. These reports are typically submitted through email. In the future, a copy of the emailed submittal will be retained in our files to provide documentation of the date of submission.

2021-006) Reporting Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant (CDBG) Grant No(s): All grants identified on the Schedule of Expenditures of Federal Awards. Criteria: Financial and performance reports filed with granting agencies must be filed timely in accordance with program regulations and guidance and financial amounts must be supported by the accounting records. One of the reports required to be filed is the Comprehensive Annual Performance and Evaluation Report or CAPER. Condition: The City-Parish did not provide evidence of the CAPERS filing during or for 2021. Universe/ Population: One CAPER was required to be filed, but no evidence was provided that the report was filed. Effect: The program may be non-compliant with its reporting requirements. Cause: The City-Parish transitioned the program?s administration during 2021. Recommendation: The CAPER should be filed by the due date. View of Responsible Official: The City-Parish provided evidence that the HUD reporting system was inactive and therefore the City-Parish was unable to enter the required information for the CAPER. The CAPER is an electronic report generated from the HUD reporting system based on information entered by the City-Parish. A report can be generated and downloaded from the HUD reporting system after the information is entered. The City-Parish will continue to seek guidance from HUD IT and the HUD representative on the status of when the reporting system will be available for use. If the system is inactive in the future, the City-Parish will request an extension from HUD on the CAPER.

2021-007) Reporting Questioned Costs: N/A Department of the Housing and Urban Development 14.218 Community Development Block Grant Grant No(s): All grants identified on the Schedule of Expenditures of Federal Awards. Criteria: Financial and performance reports filed with granting agencies should be subjected to internal controls to ensure accuracy and completeness. Review of reports by an employee (preferably an accountant) independent of the preparer is a best practice and common control. Reports should also be reconciled to balances in the accounting system. Condition: The City-Parish?s CO4PR29 reports which contain quarterly financial activity are not always reviewed by someone other than the preparer. Universe/ Population: Two of the eight quarterly reports filed were subjected to audit. Neither report contained evidence of independent review. Effect: Without an independent review process, the City-Parish?s financial reports for grants are at higher risk for error. The 4th quarter program income cash per the CO4PR29 was out of balance with the accounting records by approximately $15,000. Cause: The City-Parish transitioned the program?s administration during 2021 and experienced turnover in the accounting department. Recommendation: All grant reports containing financial information should undergo independent review and be fully reconciled to the accounting records. View of Responsible Official: City-Parish will establish additional reviews to ensure that the financial reports to the grantor agencies are accurate and complete prior to submitting. Review of reports by an employee independent of the preparer will be part of the financial report process, with the reviewer initialing and dating the reports upon review. In addition, the reviewer will ensure that the reports reconcile to the balances in the accounting system.

2021-008) Real Property Management Questioned Costs: $27,213 Department of the Housing and Urban Development 14.218 Community Development Block Grant Grant No(s): B-10-MC-22-0002, B-11-MC-22-0002, B-14-MC-22-0002, B-15-MC-22-0002, B-16-MC-22-0002 Criteria: According to HUD regulation 24 CFR 570.505, when real property that was purchased with CDBG grant funds is no longer needed for the originally authorized use, the change in use of the property must be approved by the affected citizens prior to any disposition. The property may then be disposed of if the CDBG program is reimbursed to fair value of the property less any portion of the value attributable to non-CDBG funds. The Uniform Guidance, 2 CFR 220.311, also requires grant recipients to follow instructions from its Federal awarding agency that provide for competition and result in the highest possible return. Condition: The City-Parish made improvements to real property using a combination of dollars from four sources: Its own direct CDBG grants, CDBG grants from the LA Office of Community Development, the EBR Council on Aging, and its general fund. The combined investment from these sources was $4,045,000. The improved real property was sold to the Council on Aging in 2021 for $1,090,000, its appraised value after renovations. In distributing the sale proceeds to the four funding sources, the City?s CDBG program did not receive its full share. The net amount received was $280,412, while the amount it should have received under 24 CFR 570.505 was $307,325, a difference of $27,213. Universe/ Population: Only one sale of property occurred during the year, which was selected for our audit procedures. Effect: The City-Parish?s CDBG program was not credited with the full amount to which it was entitled. Cause: The City-Parish?s CDBG program does not normally sell such assets and therefore this transaction was unusual to its normal program administration. Recommendation: The City-Parish should restore $27,213 to its CDBG program. We also recommend discussion with and direction from Federal HUD officials in future real estate sales affecting CDBG funded real estate. View of Responsible Official: The City-Parish will restore $27,213 to its CDBG program as well as discuss with and obtain direction from Federal HUD officials in future real estate sales affecting CDBG funded real estate.

2021-009) Period of Performance Questioned Costs: $679,990 Department of Housing and Urban Development 14.218 Community Development Block Grant Grant No(s): B-07-MC-22-0002, B-08-MC-22-0002, B-09-MC-22-0002, B-10-MC-22-0002, B-11-MC-22-0002, B-12-MC-22-0002, B-90-MC-22-0002 through B-99-MC-22-0002 Criteria: CDBG entitlement funds must be expended by the end of the eighth fiscal year after the fiscal year of appropriation. Condition: $679,990 of costs were charged to grant years prior to 2013, eight years past from 2021. Universe/ Population: Accounting records are kept by grant year. Those records reported $679,990 expended for grants prior to 2013, eight years prior to 2021. Effect: The City-Parish expended funds outside of the period of performance required by the grant. Cause: The City-Parish has experienced turnover and several years of internal control deficiencies. Recommendation: The City-Parish should seek guidance from HUD as to the use of funds beyond the period of performance set forth in HUD regulations. View of Responsible Official: HUD, the grantor agency, aggregated all pre-2015 funds to FY2014. All pre-2015 funds were eligible for recapture October 2021 consistent with the FY2014 fund expiration because all pre-2015 funds were aggregated to 2014. Therefore, the City-Parish feels that the invoices in question are prior to the recapture dated and therefore are in compliance with the guidance. The City-Parish will seek guidance from HUD as to the use of funds beyond the period of performance set forth in HUD regulations.

2021-010) Eligibility Questioned Costs: $445,319 Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No. M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204 Criteria: Rental housing projects developed with HOME program assistance must be occupied by low-income families and must meet certain limits on rental amounts charged. If the project consists of five or more units, 20% of the units must be occupied by very low-income families. Condition: We noted one project that was funded in 2021 whose loan amount totaled $720,000, wherein the loan agreement, according to our reading, did not contain the required number of set-aside very low income units. This is a repeated finding from the prior year. Universe/ Population: Six rental projects with loan amounts totaling $3,533,125 involving 5 or more units were tested. One of those project?s agreements (Foster Oaks) with a loan amount of $720,000 did not contain the requirement for the required number of set-aside very low-income units. The funded amount of the loan in 2021 was $445,319. Effect: Without contractual terms to comply with the aforementioned program requirements, the project mentioned above is at risk for noncompliance with HOME regulations. Cause: The City-Parish has experienced turnover and several years of internal control deficiencies. Recommendation: The City-Parish should ensure that all contracts with developers receiving HOME funding contain the appropriate program requirements. View of Responsible Official: An amendment to the existing agreement will be complete to further clarify that 20% of the units must be reserved for families at or below 50% AMI. The City-Parish will ensure that all contracts with developers receiving HOME funding contain the appropriate program requirements.

2021-011) Allowable Costs and Activities Questioned Costs: $53,000 Department of the Treasury 21.023 Emergency Rental Assistance Program (ERAP) Grant No(s): N/A Criteria: ERAP program guidance issued by Treasury indicates that grantees must have controls in place to ensure compliance with their policies and procedures and prevent fraud. Condition: The City-Parish has policies and procedures in place to prevent and detect fraud and six instances of known or suspected fraud were self-detected through execution of those policies and procedures. The Baton Rouge Police department was notified and these matters were investigated. Universe/ Population: Seven suspected cases were identified and six were determined to involve fraud. Effect: The City-Parish?s ERAP program fell victim to fraud totaling approximately $53,000. Cause: The volume, complexity, and rapid pace needed to provide benefits inherently results in higher risk of fraud. The City-Parish?s policies and procedures detected the fraud as required by program guidance. Recommendation: The City-Parish should continue to follow its established policies and procedures for preventing and detecting fraud. View of Responsible Official: Fraud, waste and abuse measures have been implemented and training has been provided for all case managers and administrative staff. All instances of fraud are reported to the City-Parish Attorney?s office and local authorities for recapture of the funding when the recipients are not willing to return funds voluntarily.

2020-002) Allowable Costs, Procurement Questioned Costs: Not Determined Department of Homeland Security 97.039 Hazard Mitigation Grant Program Grant No(s): FEMA-4277-DR LA, Project #059 Criteria: The Uniform Guidance sub-part E cost principles (2 CFR 200.043) set the general criteria for allowability of costs for federal awards. One of those general criteria is that costs be reasonable and necessary. Furthermore, 2 CFR 200.320 provides that competitive proposals for architectural and engineering (A&E) contracts can be procured using a competitive proposal process whereby qualifications are evaluated and the most qualified offeror, subject to negotiation of fair and reasonable compensation. Universe /Population: The universe/population is one engineering firm contracted by the City-Parish with respects to this project. Condition: The City-Parish contracted with an engineering firm to design and prepare its Stormwater Drainage Master Plan and the contract is to be funded with the federal grant. The City-Parish procured these services through a competitive proposal process whereby the most qualified proposer was selected. However, the City-Parish?s process for negotiating a fair and reasonable contract may need improvement. No formal documentation could be provided to demonstrate how the City-Parish considered the price of $15 million to be fair and reasonable. Effect: Without established processes for reviewing qualifications based contract awards for fairness and reasonableness, such contract costs could become ineligible for reimbursement under federal awards. Cause: The City-Parish lacks an established and formalized process for determining the fairness and reasonableness of qualifications-based awards to A&E firms. Recommendation: The City-Parish should establish, in writing, formalized processes and/or guidelines for negotiating the fairness and reasonableness of A&E contracts prior to awarding the contracts. View of Responsible Official: The City-Parish Stormwater Master Plan?s contract was awarded using the ?Request for Qualification? (RFQ) process and approved by the City-Parish?s engineering selection board. The City-Parish Stormwater Master Plan was submitted in the HMGP application. The application was reviewed and approved by the Governor?s Office of Homeland Security and Emergency Preparedness (GOHSEP), as well as the Federal Emergency Management Agency. During the detailed review by the Louisiana Legislative Auditors (LLA), for the reimbursement process, cost reasonableness was raised as a concern. A consultant was hired to review the contract for cost reasonableness. The issues presented by the consultant have been addressed and all documentation has been provided to GOHSEP and LLA. It is our understanding that this has satisfied the cost reasonableness concerns by GOHSEP and LLA.

2020-003) Allowable Costs Questioned Costs: $0 Department of Labor Passed through the Louisiana Workforce Commission 17.258 WIOA Adult Program (WAP) 17.259 WIOA Youth Program (WYP) 17.278 WIOA Dislocated Worker Formula Grants (DW) Grant No(s): AA-33232-19-55-A-22, AA-34771-20-55-A-22 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430(i)(1) which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. This would include supervisory approval of timesheets/records which accurately support the employee?s time for each pay period. Universe /Population: For a sample of 26 paychecks among 3,087 issued for the year (spread among 26 employees) that were charged to the WIOA program, we observed timesheets and their supervisory review, to determine if proper internal controls were in place to ensure compliance with Uniform Guidance cost principles. Total gross pay among the paychecks was $1,684,359. Condition: Out of 26 employees? timesheets/paychecks tested, 17 lacked supervisor approval. Cause: The lack of internal controls is a result of staff turnover, the COVID-19 pandemic, resource constraints and the lack of adherence to written policies and procedures to ensure compliance with federal requirements. Documentation of timesheet review and approval of a supervisor was not consistently maintained during the fiscal year. Effect: Although further audit procedures indicated that the 17 employees? costs were appropriately charged to the program, without proper internal controls over review and documentation of personnel expenses, appropriate levels of review may not occur, and therefore, the City-Parish may be at risk for unallowable costs being charged to the program. Recommendation: The Division of Human Development and Services should adhere to written policies and procedures that ensure that all salaries and wages and related benefit costs are charged to the Federal program based on records that reflect the work performed, which are reviewed and approved by a supervisor. This documentation of approval should be written and kept contemporaneously each pay period. View of Responsible Official: Payroll processes will be updated and incorporated into the department?s Policies and Procedures Manual. All staff will participate in training on ExecuTime and the payroll allocation form to ensure all salaries and related benefits are charged to the Federal program based on work performed.

2020-004) Special Tests and Provisions Questioned Costs: Not Determined Maximum per Unit Subsidy and Underwriting Requirements Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-17-MC-0204 Criteria: The City-Parish provides federal assistance to developers to construct affordable housing that is designated for low or very low income persons through the HOME program. Prior to committing HOME funds to a project, the program administrators are to evaluate that the proposed project meets the HOME program guidelines and also evaluate that the combination of federal assistance given to the project from all sources is only what is necessary for providing affordable housing that is financially viable. This evaluation is accomplished through the subsidy layering review. Universe /Population: Four projects received assistance during the year totaling $864,000, and all were selected to determine whether the subsidy layering review was completed. The total level of funding for these 4 projects that may be disbursed across fiscal years is approximately $2,000,000. Condition: Of the four projects funded during 2020, the subsidy layering review was conducted for three of them. One, North 28th through Habitat for Humanity, was not completed (or was not provided to the auditor). Effect: The City-Parish was not able to demonstrate it complied with the requirements to evaluate the maximum per unit subsidy and underwriting requirements of the HOME program for the all projects funded in the current year. Cause: The City-Parish has experienced turnover and several years of internal control deficiencies. Recommendation: The City-Parish should ensure the documentation to support the evaluation of maximum per unit subsidy and underwriting requirements is maintained in a manner that can be located when requested in order to demonstrate compliance with the grant requirements. View of Responsible Official: Of the four projects funded during 2020, subsidy layering was conducted and documented for three of the projects when the project was selected for award. The subsidy layering documentation for the fourth project could not be located. This will be completed and documentation will be placed in the file.

2020-005) Eligibility Questioned Costs: Not Determined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-13-MC-22-0204, M-16-MC-22-0204 Criteria: Rental housing projects developed with HOME program assistance must be occupied by low income families and must meet certain limits on rental amounts charged. If the project consists of five or more units, 20% of the units must be occupied by very low-income families. Furthermore, the per-unit investment of HOME funds should not exceed the FHA mortgage limits in subsection 221 (d)(3). Universe /Population: Four projects received assistance during the year totaling $864,000, and all were selected to determine whether the subsidy layering review was completed. The total level of funding for these 4 projects that may be disbursed across fiscal years is approximately $2,000,000. Condition: Two of the four projects we selected for testing, Buffington Heights and Satinwood, contained 5 or more units, but the lending contract through which the funding is governed does not require 20% of the units to be rented to very low-income families. Also, one of the units? per-unit investment amount exceeded the FHA subsection 221 (d)(3) limits as per the terms of the lending contract. Effect: Without contractual terms to comply with the aforementioned program requirements, the three projects mentioned above are at risk for noncompliance with HOME regulations. Cause: The City-Parish has experienced turnover and several years of internal control deficiencies. Recommendation: The City-Parish should ensure that all contracts with developers receiving HOME funding contain the appropriate program requirements. View of Responsible Official: The OCD acknowledges that there was one project that exceeded the FHA subsection 221 (d)(3) limits. That project has been fully completed and funds expended. In the future, the OCD will ensure subsidy layering is completed and adherence to subsidy limits will be enforced prior to the final award. Although the low-income family occupancy requirement is being met, the contracts do not include this requirement. Agreements will

2020-006) Allowable Costs Department of Health and Human Services Passed through Louisiana Workforce Commission 93.569 Community Services Block Grant (CSBG) Known Questioned Costs: $5,935 Grant No(s): 2019 P0019, 2020 P0020, 2001LACSC3 Criteria: Costs charged to Federal grants must meet the provisions of the standards for documentation of personnel expenses contained in 2 CFR 200.430 which requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work actually performed and these records must be supported by a system of internal controls which provide a reasonable assurance that the charges are accurate, allowable, and properly allocated. Universe /Population: For a sample of 26 paychecks among 922 issued for the year (spread among 35 employees) that were charged to the CSBG program, we observed timesheets and their supervisory review, to determine if proper internal controls were in place to ensure compliance with Uniform Guidance cost principles. Total gross pay among the paychecks was $686,772. Condition: Employees performing CSBG activities also perform work for other federal and locally funded programs. Salaries and wages of employees charged to CSBG program were not accurately supported by actual, historical time records. The time charged to the program was based on an estimated allocation amount per pay period instead of the actual time and effort spent on the program. Of twenty-six (26) CSBG employees selected for testing across 26 pay periods, only 17 (65%) timesheets were provided. Of the 17 timesheets provided, P&N noted the following: ? 2 of 17 were properly allocated. Actual time charged to the general ledger agreed to timesheet records. ? 1 of 17 was improperly allocated and time charged to CSBG per the general ledger was less than actual time worked per the employee?s timesheet. Thus effectively undercharging the CSBG program. ? 14 of 17 were improperly allocated and time charged to CSBG per the general ledger was more than actual time worked per the employee?s timesheet. Thus effectively overcharging the CSBG program. Effect: The City-Parish is not in compliance with the provisions and standards of documentation as the cost allocation was based on an estimated percentage instead of actual time as reflected in the employees? timesheets. Cause: Costs allocated to these programs were not adjusted to the actual time and effort records on a periodic basis throughout the year. Recommendation: The Division of Human Development and Services must implement written policies and procedures to ensure that all salaries and wages and related benefit costs are charged to the Federal programs based on records that reflect the work performed. View of Responsible Official: Costs allocated to these programs were not adjusted to the actual time and effort records on a periodic basis throughout the year. DHDS will review internal processes to ensure actual staff time is charged to the correct program.

Special Tests and Provisions Housing Quality Standards Department of Housing and Urban Development Questioned Costs: Not Determined 14.239 Home Investment Partnerships Program (HOME)Grant No(s): M-03-MC-22-0204, M- 07- MC-22-0204; M-(09-10) -MC-22-0204, M-(12-14) -MC-22-0204, M-(16-19) -MC-22-0204 Criteria: The HOME program, as operated by the City-Parish?s Office of Community Development (OCD), includes rental properties that received assistance. The OCD is required by its grant to perform onsite inspections of these rental units to determine if the units continue to meet certain property standards. The inspections are required for a certain number of years based on the number of units in the property. Parts of this finding are repeated from the prior year. See the Summary Schedule of Prior Year Findings Item 2018-007. Condition: The OCD was not able to provide documentation demonstrating that the required onsite inspections of the rental units as required by the grant were performed. The OCD records indicated there are 7 projects that include rental units that are subject to the housing quality inspections. None of these seven had documentation that an onsite inspection was completed as required by the federal grant. Effect: The OCD was not able to demonstrate it complied with the requirements for onsite inspections. Cause: The OCD did not devote personnel to complete the required inspections on the HOME rental units or to maintain and provide documentation demonstrating the required inspections were performed. Recommendation: The OCD should perform the inspections and ensure the documentation of inspections on HOME funded projects is maintained. Personnel should be appropriately assigned to ensure compliance with federal guidelines. View of Responsible Official: The OCD has transitioned this responsibility to Build Baton Rouge (BBR). BBR will review and update the list of projects in the affordability period as well as analyze the on-site monitoring requirements for each property. Upon completion of these updates, a staff member will be assigned to perform Housing Quality Standard (HQS) inspections for each of these projects. Long term monitoring files will be created for each project in the affordability period and the inspection documentation will be placed in the project folder for future audits.

Special Tests and Provisions Wage Rate Requirements Department of Housing and Urban Development Questioned Costs: Not Determined 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-13-MC-22-0204 Criteria: The Office of Community Development (OCD) provides federal assistance to developers to construct affordable housing that is designated for low or very low income persons through the HOME program. The agreement with the developers includes a requirement that prevailing wages in the area must be paid to persons employed by the developer of subcontractor as a condition for receiving the federal assistance. The prevailing wage requirement is commonly known as being established through the Davis Bacon Act. The National Affordable Housing Act Section 286(a) specifies that construction of affordable housing with 12 or more units must require the contractor to pay prevailing wages. The HOME program provided $100,000 in federal assistance to one project during 2019 that included 12 or more units. Parts of this finding are repeated from the prior year. See the Summary Schedule of Prior Year Findings Item 2018-007. Condition: OCD was not able to provide documentation to demonstrate the contractor complied with paying prevailing wages to employees on a HOME funded project meeting the criteria to do so. Effect: The OCD was not able to demonstrate it complied with the requirements for prevailing wage rate requirements of the HOME program. Cause: The OCD was not able to provide the documentation to demonstrate that the contractor on a HOME assistance project paid its employees or subcontractors the prevailing wages. Recommendation: The OCD should ensure the documentation of prevailing wages being paid as applicable on HOME funded projects is maintained and personnel are appropriately assigned to ensure compliance with federal guidelines. View of Responsible Official: On behalf of OCD, Build Baton Rouge will conduct the wage rate reviews for this project using documentation provided for CDBG-DR funding. The reviews will be placed in the project folder. To prevent further noncompliance with this requirement, the City-Parish HOME policy manual will be updated to reflect that the prevailing wage requirements are operable without regard to whether the HOME funds are used for construction or non-construction activities.

Special Tests and Provisions Maximum per Unit Subsidy and Underwriting Requirements Department of Housing and Urban Development Questioned Costs: Not Determined 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-03-MC-22-0204, M- 07- MC-22-0204; M-(09-10) -MC-22-0204, M-(12-14) -MC-22-0204, M-(16-19) -MC-22-0204 Criteria: The Office of Community Development (OCD) provides federal assistance to developers to construct affordable housing that is designated for low or very low income persons through the HOME program. Prior to committing HOME funds to a project, the OCD is required to evaluate that the proposed project meets the HOME program guidelines and also evaluate that the combination of federal assistance given to the project from all sources is only what is necessary for provide affordable housing that is financially viable. Condition: The OCD provided assistant to two projects in 2019 where the required evaluation documentation was completed; however, there were four projects that received assistance during 2019 that were originally approved in a prior year where OCD was not able to provide documentation to demonstrate that the required evaluations were completed prior to the commitment of HOME funds. Effect: The OCD was not able to demonstrate it complied with the requirements to evaluate the maximum per unit subsidy and underwriting requirements of the HOME programs on four of the projects that were originally approved for funding prior to 2019. Cause: The OCD was not able to locate or produce the documentation to demonstrate that an evaluation was completed on projects prior to committing HOME funds on projects prior to 2019. Recommendation: The OCD should ensure the documentation to support the evaluation of maximum per unit subsidy and underwriting requirements is maintained in a manner that can be located when requested in order to demonstrate compliance with the grant requirements. View of Responsible Official: On behalf of OCD, Build Baton Rouge will conduct a formal subsidy layering review for all open HOME projects. The review will be added to the project file.

Eligibility Department of Housing and Urban Development Questioned Costs: Not Determined 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-03-MC-22-0204, M- 07- MC-22-0204; M-(09-10) -MC-22-0204, M-(12-14) -MC-22-0204, M-(16-19) -MC-22-0204 Criteria: Rental housing projects developed with HOME program assistance are required to be occupied by low income families and must meet certain limits on rental amounts charged. The HOME program contract with the rental project developers includes a requirement that the developer annually file a schedule of the rental units, the maximum and minimum rents charged, any subsidy allowances, actual rents charged, the certification documentation showing families receiving rental subsidies qualified for low income, and any other documentation to support compliance with the Affordable Housing Restrictions of the HOME Program. Condition: The Office of Community Development (OCD) was unable to provide the documentation of receipt of the required annual reports from all developers of rental housing projects funded with HOME program assistance as required by the Housing Loan Program Contracts. The assistance provided to the developers are forgivable loans that are contingent on continuing to comply with the terms of the contract. Effect: The OCD was unable to demonstrate that the required documentation for compliance from the rental housing projects was received per the terms of the Housing Loan Program Contracts. Without the receipt and review of these required schedules, the OCD is unable to determine if the rental housing projects are actually being occupied by families who qualify as low income. The annual reports required to be filed by the developers is necessary to monitor this continuing compliance and to determine if the loan balance can be forgivable. Cause: The OCD could not locate or provide the documentation of receipt or review of the required annual reports from project developers. A complete listing of all project developers who are required to file the annual report with updated contact information of the persons who are responsible submitting the annual report was also lacking. Recommendation: The OCD should determine the developers who have received rental housing HOME Program assistance and locate the schedules that have been filed or require the developers to file the schedules. These schedules need to be reviewed and evaluated to determine if the rental housing development continues to comply with the eligibility program requirements. View of Responsible Official: The OCD has transitioned this responsibility to Build Baton Rouge (BBR). BBR will review and update the list of projects in the affordability period. BBR will research IDIS and historical file data to compile a complete and accurate listing. Upon completion of these updates, a staff member will be assigned to collect current rental information per unit. Long term monitoring files will be created for each project in the affordability period and the inspection documentation will be placed in the project folder for future audits.

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