City of WatsonvilleLocal Government

? Finding reference number: 2022-001 ? Assistance Listing Number: 14.218 ? Assistance Listing Title: Community Block Development Grant Coronavirus (COVID19) ? Name of Federal Agency: Department of Housing and Urban Development. ? Criteria: Part 7 ?Additional CDBG-CV Requirements? of the Funding Approval/ Agreement states the program is subject to various reporting requirements under the Federal Funding Accounting and Transparency Act. In addition, the City should monitor their subrecipients to ensure they are following the direction of the grant. This count be done by on site visitation or reviewing the subrecipients single audit, if applicable. ? Condition: Per review of grant documents and per conversation with the City staff, the City did not comply with the reporting requirements under the Federal Funding Accounting and Transparency Act and subrecipient monitoring has not been performed. ? Effect: The City is not in compliance with the Federal Funding Accounting and Transparency Act as required by the grant application or monitoring subrecipients receiving gran funding ? Cause: The City overlooked these requirements as the subrecipients were only set to receive a one-time award with the grant funds. ? Identification as a repeat finding: No. ? Recommendation: We recommend the City to follow the Grant requirement regardless whether it is just one-time funding or not. ? View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding reference number: SA2019-001 Timeliness of Drawdowns ? CFDA Number: 14.218 ? CFDA Title: Community Development Block Grants/Entitlement Grants (CDBG) ? Name of Federal Agency: Department of Housing and Urban Development ? Federal Award Identification Number and Year: B-18-MC-06-0052 Year of Initial Award ? 2018 ? Criteria: 2 CFR 200.305(b) requires that payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity. In addition, 24 CFR 570.902 indicates that the Department of Housing and Urban Development will review the performance of each entitlement, HUD-administered small cities, and Insular Areas recipient to determine whether each recipient is carrying out its CDBG-assisted activities in a timely manner. One of the factors in determining timeliness is the timing of the use of entitlement grant funds and the amount of undisbursed entitlement grant funds that remain in the Integrated Disbursement Information System (IDIS). Therefore, the City should submit drawdown requests in the IDIS system throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. ? Condition: We noted that a drawdown made in March 2019 included expenditures from July through November 2018, The City submitted the drawdown requests more than three months after the expenditures had incurred. ? Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of being out of compliance with the provisions of 2 CFR 200.305(b) and 24 CFR 570.902. ? Cause: OPEN ? Recommendation: The City should develop procedures to ensure that drawdown requests are submitted more frequently, at least on a quarterly basis. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

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