Federal Reports

The Corporation for National and Community Service (CNCS or the Corporation) has begun toimplement a plan to restructure the Corporation and alter its core grantmaking and grantmanagement business practices. While CNCS’s Office of Inspector General (CNCS-OIG) stronglysupports a re-examination of the Corporation’s structure, our experience indicates CNCS doesnot have the capacity to carry out its complex transformation plan at the rapid pace envisioned.CNCS has scheduled the reorganization, with its many risks, to occur at the same time as criticallyneeded improvements to CNCS’s core business functions – developing information technologysufficient to support grant management; preparing and testing an effective grant risk model andaligned cost-effective monitoring activities; achieving reliable financial management, accountingand reporting; and establishing effective cybersecurity. Despite efforts, CNCS has been unableto achieve these improvements over the last several years, without the added stress of a majorstructural overhaul. The plan to accomplish these critical infrastructure upgrades whilesimultaneously reorganizing grantmaking, grant management and grant administration isunrealistic, exceeds the Corporation’s capabilities and creates a substantial risk that CNCS willnot be able to achieve its mission of supporting national service.Instead, we strongly recommend that CNCS sequence the reforms, concentrating first onstanding up the infrastructure to support informed, risk-based grantmaking and grantmonitoring. Also imperative is completing and validating the corrective actions for financialmanagement, accounting and reporting, so that CNCS can accurately track expenditures andprovide strong stewardship of taxpayer funds. We further recommend that CNCS delay thereorganization to a regional structure until such time as it implements these critical upgrades.We are not suggesting an abandonment of the reorganization, but rather a slower-paced andrisk-based, tiered approach to appropriately prioritize goals and promote the ultimate success ofCNCS’s comprehensive plan.

The Corporation for National and Community Service (CNCS or the Corporation) has begun toimplement a plan to restructure the Corporation and alter its core grantmaking and grantmanagement business practices. While CNCS’s Office of Inspector General (CNCS-OIG) stronglysupports a re-examination of the Corporation’s structure, our experience indicates CNCS doesnot have the capacity to carry out its complex transformation plan at the rapid pace envisioned.CNCS has scheduled the reorganization, with its many risks, to occur at the same time as criticallyneeded improvements to CNCS’s core business functions – developing information technologysufficient to support grant management; preparing and testing an effective grant risk model andaligned cost-effective monitoring activities; achieving reliable financial management, accountingand reporting; and establishing effective cybersecurity. Despite efforts, CNCS has been unableto achieve these improvements over the last several years, without the added stress of a majorstructural overhaul. The plan to accomplish these critical infrastructure upgrades whilesimultaneously reorganizing grantmaking, grant management and grant administration isunrealistic, exceeds the Corporation’s capabilities and creates a substantial risk that CNCS willnot be able to achieve its mission of supporting national service.Instead, we strongly recommend that CNCS sequence the reforms, concentrating first onstanding up the infrastructure to support informed, risk-based grantmaking and grantmonitoring. Also imperative is completing and validating the corrective actions for financialmanagement, accounting and reporting, so that CNCS can accurately track expenditures andprovide strong stewardship of taxpayer funds. We further recommend that CNCS delay thereorganization to a regional structure until such time as it implements these critical upgrades.We are not suggesting an abandonment of the reorganization, but rather a slower-paced andrisk-based, tiered approach to appropriately prioritize goals and promote the ultimate success ofCNCS’s comprehensive plan.

This report presents the results of our inspection of the Small Business Administration’s (SBA’s) initial disaster assistance response to Hurricane Florence, the first major hurricane of the 2018 Atlantic hurricane season. This category 1 hurricane made landfall over Wrightsville Beach, North Carolina, on September 14, 2018, dumping massive amounts of rain throughout the Carolinas and causing catastrophic flooding.SBA responded effectively during its initial disaster assistance response for Hurricane Florence. Specifically, SBA provided adequate staffing and surpassed its goals for establishing a field presence, opening Business Recovery Centers, and processing loan applications timely.In order to establish a presence and assist Hurricane Florence survivors, SBA used staff already onboard to assist Hurricane Maria survivors and rehired previously trained personnel used for Hurricanes Harvey and Irma. As of the end of August 2018, SBA had approximately 1,877 staff onboard. To respond to Hurricane Florence and other disasters, SBA continued to increase its disaster assistance staffing up to 2,808 by the end of November 2018.In response to Hurricane Florence, SBA surpassed its staffing goals for establishing field presence in both North Carolina and South Carolina. SBA provided staff for the Joint Field Office in North Carolina on September 17, just 3 days after the disaster declaration, and in South Carolina on September 21, 2018, the same day as the disaster declaration. Additionally, SBA opened its first Business Recovery Center in North Carolina on September 18, 2018, and South Carolina on September 25, 2018, which was within 4 days of each state’s disaster declaration.By the end of November 2018, SBA received 21,183 loan applications for Hurricane Florence. Of those, 17,791, or about 84 percent, were processed to a final decision; 2,743, or about 13 percent, were withdrawn; and 649, or about 3 percent, remained to be processed. SBA approved 9,206 of 17,791, or about 52 percent, totaling approximately $368 million. Of those, 5,202 loans, or about 57 percent, were disbursed totaling approximately $93.8 million.Lastly, we computed SBA’s processing times for Hurricane Florence disaster loan applications with a loan approval, denial, or withdrawal as of the end of October 2018 and found that SBA also exceeded their goals. The average processing time was approximately 7 days when computer-generated declines were not included. However, when these computer-generated declines were included, the overall average processing time was approximately 5 days.

Due to the importance of having qualified personnel in safety-sensitive positions, we initiated an evaluation to determine if minimum job requirements for safety-sensitive positions in Power Operations were met at the time of promotion or hire.We reviewed minimum job requirements for 56 of 141 employees who were hired, rehired, or promoted to safety-sensitive positions in Power Operations during fiscal years 2017 and 2018. We determined some employees did not meet minimum job requirements for safety-sensitive positions upon hire or promotion. Specifically, we determined 4 employees did not meet one or more of the job requirements related to certifications or experience. In addition, we determined 11 employees in safety-sensitive positions did not meet minimum training requirements listed on the job descriptions to be completed after they were promoted. We also identified an opportunity for improvement regarding documentation of required training.

Due to the importance of an effective response in the event of an emergency, we conducted an evaluation to determine if (1) emergency response plans at gas plants were up to date and (2) required systems were available and functional.We found 10 of 17 emergency response plans for gas plants were not reviewed on a timely basis based on TVA’s requirement for an annual review, and all contained inaccurate contact information. We also found some systems required in emergency response plans were not available or functional. Specifically, we observed availability or functionality issues with at least two of four emergency alerting and notification systems tested at all six gas plants visited.

We audited the Housing Authority of the County of Stanislaus’ Shelter Plus Care program based on a hotline complaint and concerns expressed by the San Francisco Office of Community Planning and Development regarding the Authority’s lack of documentation to support participant eligibility. Our objective was to determine whether the Authority documented participant eligibility related to homelessness and disability in accordance with Shelter Plus Care program requirements. While participants’ disabilities were supported, the complaint had some merit as the Authority did not always adequately document participants’ eligibility related to homelessness in accordance with HUD requirements. In 1 of the 15 participant files reviewed, the Authority’s documents lacked detail to show that the applicant, who was in transitional housing, originally came from the streets or emergency shelters, an additional requirement stated in the notice of funding availability. This condition occurred because Authority staff did not fully understand the requirement and thought the service agency referral was sufficient to verify eligibility. As a result, the Authority could not support that $13,885 in housing assistance payments and any subsequent payments made were for an eligible participant.We recommend that the Director of HUD’s San Francisco Office of Community Planning and Development require the Authority to provide supporting documentation for $13,885 in housing assistance payments and subsequent payments made for the participant for whom eligibility could not be supported or repay its program from non-Federal funds.

We audited the Housing Authority of the County of San Bernardino’s Continuum of Care grant funds received from the U.S. Department of Housing and Urban Development (HUD). We audited the Authority because it is among the top 15 percent of competitive grantees in HUD’s Office of Community Planning and Development’s risk analysis. Our audit objective was to determine whether the Authority administered its Continuum of Care grants in accordance with HUD requirements.The Authority did not have adequate support for the administrative fees charged to its Continuum of Care grants. This condition occurred because the Authority lacked a detailed written administrative fee cost allocation methodology in its policies and procedures. As a result, HUD had no assurance that administrative fees of $663,070 charged to the Continuum of Care grants were appropriate. We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require the Authority to (1) adequately support the administrative fees or repay its Continuum of Care grants $663,070 from non-Federal funds, (2) submit an indirect cost rate schedule for its Continuum of Care grants to HUD for approval, and (3) develop and implement written policies and procedures for its administrative fee charges.