Federal Reports

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act made available $5 billion in supplemental CDBG funding for grants to prevent, prepare for, and respond to the coronavirus pandemic (CDBG-CV grants). Because of similarities, we reviewed 132 CDBG-DR program audits and evaluations issued from May 2002 to March 2020 to summarize the common CDBG-DR program weaknesses and risks for CPD to consider to help its CDBG-CV grantees effectively and efficiently manage their CDBG-CV program operations.We found that grantees had common areas of weaknesses and risks in the administration of their CDBG-DR programs. More than 44 percent of grantees reviewed (32 of 72) did not follow program requirements, resulting in questioned costs totaling more than $1.7 billion. Generally, grantees (1) did not follow general program and administrative requirements, including duplication of benefits requirements, Federal cost principles, and procurement requirements; (2) could not support the eligibility of applicant awards; (3) did not adequately monitor their program; and (4) did not follow grant requirements or did not ensure that subrecipients or contractors followed agreements or requirements. These conditions occurred because the grantees (1) lacked controls or were unfamiliar with the program requirements; (2) had weak policies or did not implement controls; (3) relied on or did not monitor their subrecipients or contractors; and (4) lacked adequate staff or capacity to administer the program.As of September 11, 2020, CPD had awarded the CDBG-CV grant funds to 1,265 formula and joint grantees to respond to the pandemic, and 1,195 grantees, or about 94 percent, lacked experience with CDBG-DR activities. Most CDBG-DR grantees that incurred questioned costs were unfamiliar with the program requirements and did not implement adequate policies and internal controls. The lack of familiarity with program rules, the creation of new programs, and the ability of States to directly administer a program are also likely to be issues for CDBG-CV grantees without disaster experience. To ensure program integrity and timeliness of CDBG-CV activities and to mitigate the risk of financial loss, CPD should Provide grantees with training or other technical assistance to help familiarize them with program requirements.Ensure that grantee coronavirus activities are allowed and are needed to prevent, prepare for, and respond to the coronavirus pandemic.Ensure that grantees without disaster experience become familiar with the program rules and have the capacity to directly administer the coronavirus funding if they choose to directly administer the funds instead of passing the funds through to units of general local government.Ensure that grantees are aware of the requirements to prevent duplication of benefits issues related to other agencies and entities providing coronavirus relief to the same applicants.Ensure that grantees become familiar with Federal procurement requirements, cost principles, and other administrative requirements.

Restricted

The Office of the Inspector General included an audit of Tennessee Valley Authority’s (TVA) corporate contributions in our annual audit plan due to the potential reputational risk associated with contributions that do not comply with TVA policies and procedures. Our audit objective was to determine if corporate contributions were made in compliance with TVA’s Standard Programs and Processes (SPP) 36.001, Corporate Contributions (Contributions Policy).We found 41 contributions totaling $296,582 made using miscellaneous vouchers rather than submitted through TVA’s online request and approval system in violation of TVA’s Contributions Policy. We also noted the Contributions Policy and TVA‑SPP‑13.092, Miscellaneous Vouchers, contradict one another. TVA‑SPP‑13.092, Miscellaneous Vouchers, states miscellaneous vouchers may be used for payment of contributions while the Contributions Policy states all contributions made by TVA must be processed through the Community Relations office to confirm consistent adherence to the approval requirements and minimize overlapping of contributions, including sponsorships.We also found control weaknesses including inadequate segregation of duties, inadequate controls for contribution approvals, and a lack of ongoing technical support for the contributions request and approval system. Additionally, in-kind donations are not managed and tracked as outlined in the Contributions Policy.