oversight

HUD's ONAP Lacked Adequate Controls Over the ICDBG Closeout Process

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-08-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

OFFICE OF AUDIT
REGION 9
   CDBG
LOS ANGELES, CA




               Office of Native American Programs
                         Washington, DC

      Indian Community Development Block Grant
                  Grant Closeout




2014-LA-0006                                   AUGUST 19, 2014
                                                        Issue Date: August 19, 2014

                                                        Audit Report Number: 2014-LA-0006




TO:            Rodger J. Boyd
               Deputy Assistant Secretary, Office of Native American Programs, PN

               //SIGNED//
FROM:          Tanya E. Schulze
               Regional Inspector General for Audit, Los Angeles Region, 9DGA


SUBJECT:       HUD’s ONAP Lacked Adequate Controls Over the ICDBG Closeout Process


    Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of HUD’s Office of Native American
Programs’ Indian Community Development Block Grant closeout process.

    HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.

    The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.

   If you have any questions or comments about this report, please do not hesitate to call me at
213-534-2471.
                                           August 19, 2014
                                           HUD’s ONAP Lacked Adequate Controls Over the
                                           ICDBG Closeout Process




Highlights
Audit Report 2014-LA-0006


 What We Audited and Why                    What We Found

We audited the U.S. Department of          HUD’s ONAP did not have adequate controls over the
Housing and Urban Development’s            ICDBG closeout process. Specifically, ONAP lacked
(HUD) Office of Native American            written policies and procedures for management’s
Programs’ (ONAP) Indian Community          oversight to ensure that closeout data were accurately
Development Block Grant (ICDBG)            tracked and grants were closed in a timely manner.
program grant closeout process based       This condition occurred because ONAP did not focus
on data received from Southwest            on grant closeouts as a priority and did not design
ONAP and additional analysis that          sufficient oversight procedures to consistently monitor
raised concerns regarding ONAP’s           grant closeout eligibility. As a result, ONAP did not
oversight of the grant closeout process.   always initiate timely follow-up action to determine
Our objective was to determine whether     grant closeout eligibility, and management lacked
ONAP had adequate controls to ensure       sufficient tracking data to efficiently monitor grant
the timely closeout of program grants.     closeouts.

                                           We reviewed a sample of 58 grants awarded during the
 What We Recommend
                                           audit period from 2007 through 2012 and found that
                                           ONAP did not take timely follow-up action to address
We recommend that the Deputy               indications of closeout eligibility for 18 grants totaling
Assistant Secretary for the Office of      $13.1 million. At the time of our audit, four of these
Native American Programs (1) develop       grants totaling nearly $4 million were eligible for
and implement policies and procedures      closeout yet remained open without timely follow-up
for management’s oversight of the          action to pursue grant closeout. Further, ONAP’s PTD
ICDBG closeout process, resulting in       reported erroneous data related to grant closeouts for
nearly $4 million in funds being put to    24 of the 58 sample grants totaling $14.8 million.
better use; (2) review the Performance
Tracking Database (PTD) and identify
and correct inaccurate or missing data;
and (3) consider enhancing the PTD to
track the current status of ONAP
follow-up actions for grants that appear
to be overdue for closeout.
                            TABLE OF CONTENTS

Background and Objective                                                3

Results of Audit
      Finding:     HUD’s ONAP Lacked Adequate Controls Over the ICDBG   5
                   Closeout Process

Scope and Methodology                                                   10

Internal Controls                                                       12

Appendixes
A.    Schedule of Funds To Be Put to Better Use                         13
B.    Auditee Comments and OIG’s Evaluation                             14
C.    Detailed Results of OIG’s Review                                  17
D.    Criteria                                                          19




                                            2
                       BACKGROUND AND OBJECTIVE
The U.S. Department of Housing and Urban Development’s (HUD) Office of Native American
programs (ONAP) administers housing and community development programs for the benefit of
American Indians and Alaska Native governments, tribal members, the Department of Hawaiian
Home Lands, and Native Hawaiian and other Native American organizations. ONAP’s mission is
to increase the supply of safe, decent, and affordable housing to Native American families;
strengthen communities by improving living conditions and creating economic opportunities for
tribes and Indian housing residents; and ensure fiscal integrity in the operation of the program it
administers.

Under Section 106 of the Housing and Community Development Act of 1974, 1 percent of the
Title I Community Development Block Grant appropriation is allocated for grants to Indian
tribes. The Indian Community Development Block Grant (ICDBG) funds are distributed by the
area ONAP offices to Indian tribes and Alaska Native villages competitively, based on selection
criteria set forth in the notice of funding availability. ICDBG provides single-purpose grants to
eligible grantees for housing rehabilitation, land acquisition, community facilities, infrastructure
construction, and economic development activities that benefit primarily low- and moderate-
income persons.

This program is administered by the six ONAP offices, with policy development and oversight
provided by the Denver National Program Office of ONAP. Each ONAP office is responsible
for a geographic jurisdiction that includes from 26 to more than 200 eligible applicants.




ONAP is required to ensure that closeout procedures are performed after ICDBG activities are
completed. Closeout procedures include submission of final financial and performance reports,
execution of closeout agreements, and cancellation of remaining grant funds. ONAP uses its


                                                  3
Performance Tracking Database (PTD) as a tool to monitor the status of its grants, including
grant closeout eligibility. The PTD includes functionality to track planned project completion
dates and funding amounts drawn for each grant. ONAP considers untimely grant closeouts as
part of its competitive grant award rating process, thereby impacting the rating and future
funding of grantees that fail to close out grants in a timely manner.

Our objective was to determine whether ONAP had adequate controls to ensure the timely
closeout of program grants.




                                               4
                                      RESULTS OF AUDIT


Finding: HUD’s ONAP Lacked Adequate Controls Over the ICDBG
         Closeout Process
HUD’s ONAP had not implemented consistent and effective policies and procedures for
management’s oversight of the ICDBG closeout process to ensure that grants were tracked and
closed in a timely manner. Additionally, ONAP’s PTD was not always reliable and did not
track the status of grants that appeared to be overdue for closeout. This condition occurred
because ONAP previously did not prioritize grant closeouts and did not design sufficient
oversight procedures to consistently monitor grant closeout eligibility. As a result, four of these
grants totaling nearly $4 million were eligible for closeout yet remained open because ONAP did
not always initiate timely follow-up action to determine grant closeout eligibility and
management lacked sufficient tracking data to efficiently monitor grant closeouts.


    ONAP Lacked Written Policies
    and Procedures for
    Management’s Oversight

                   ONAP did not have written policies and procedures establishing minimum
                   requirements for management’s oversight of the ICDBG closeout process.
                   Regulations at 24 CFR (Code of Federal Regulations) 1003.508 1 require that
                   program grants be closed out when the area ONAP determines, in consultation
                   with the grantee, that all costs have been incurred and required grant activities are
                   complete. ONAP’s ICDBG Grants Management Business Process Manual 2 states
                   it is recommended that ONAP area office staff should review grants for closeout
                   eligibility biannually and take the following actions:

                   (1)     Initiate closing documents for all grants with 100 percent drawn down.
                   (2)     Contact all tribes with grants that are 5 years old or older to determine
                           whether the remaining funds are going to be drawn down or closing
                           documents should be initiated, and
                   (3)     Contact all tribes with grants that are less than 5 years old and have a 95
                           percent or greater drawdown but no account activity within the last year to
                           determine whether the remaining funds are going to be drawn down or
                           closing documents should be initiated.

                   While these policies appeared adequate for staff-level follow-up regarding grant
                   closeout, ONAP did not have written policies and procedures or minimum
                   standards for management’s oversight to ensure that these procedures were
1
    See appendix D.
2
    Chapter 12 of ICDBG Grants Management Business Process Manual, sections 12.1.1 and 12.3 (appendix D)


                                                       5
                 followed. ONAP managers at the area offices indicated that they periodically
                 performed various procedures to identify grants that were overdue for closeout,
                 such as reviewing PTD reports or reviewing grantees’ annual status reports;
                 however, these procedures were not consistent among the field offices and were
                 not always effective. For example, at least one ONAP area office experienced a
                 significant backlog of overdue grant closeouts, including more than 200 overdue
                 grants. ONAP management had taken steps within the past year to address this
                 backlog yet had not implemented adequate controls to monitor grant closeouts
                 and ensure that this problem did not recur. Our review performed on a sample of
                 current grants, as discussed below, identified persistent discrepancies for some
                 grants that were not addressed, indicating that management’s reviews were not
                 always performed as planned or were not effective.

    ONAP Did Not Always Close
    Out Program Grants in a
    Timely Manner

                 To evaluate whether ONAP provided adequate oversight of the grant closeout
                 process, we selected a targeted sample of 58 program grants awarded for
                 program years 2007 through 2012. 3 For 18 of the 58 grants, a significant period
                 had elapsed after the planned closeout date or final draw date, and ONAP did not
                 have documentation demonstrating that it took timely follow-up action to
                 determine the grant status and pursue closeout. The period without follow-up
                 action for these cases ranged from 181 to 1,438 days and averaged at least 555
                 days. 4 At the time of our audit, four of these grants totaling nearly $4 million
                 were eligible for closeout yet remained open without timely follow-up action to
                 pursue grant closeout.


                                     $600,000                                  $599,955
                               Grant: B07SR280260                        Grant: B07SR263640

                                                      Funds to be put to
                                                         better use
                                                         $3,999,955

                                     $600,000                                $2,200,000
                               Grant: B09SR250521                        Grant: B10SR040302



3
 See Scope and Methodology for a detailed explanation of the sample selection.
4
 We calculated the number of days without follow-up or corrective action as of November 7, 2013, the date we
obtained the PTD from ONAP. Therefore, the deficiencies persisted for at least the period reported and may have
persisted longer than reported.


                                                        6
    ONAP’s PTD Was Not Always
    Reliable

                 ONAP’s PTD included erroneous or missing data related to grant closeouts and,
                 therefore, was limited in its ability to serve as an effective control. The PTD
                 included inaccurate data that had persisted for years, despite the planned periodic
                 reviews by ONAP area office management. For example, of the 58 grants
                 selected for our audit sample, 24 grants totaling more than $14.8 million included
                 inaccurate PTD closeout or target closeout dates. For these cases, the inaccurate
                 data remained uncorrected for an average of 758 days.3 Eleven of the grants had
                 incorrect target closeout dates, six grants were already closed yet the closeout date
                 had not been entered into the PTD , and seven grants reported blank target
                 closeout dates.


                                     Grants containing inaccurate PTD
                                                   data
                          12
                          10
                           8                                                       24 grants remained
                           6         11                                           inaccurate in PTD for an
                           4                         7                            average of 758 days
                                                                    6
                           2
                           0
                                   Incorrect   Blank target Date grant
                                     target   closeout date closed was
                                closeout date     in PTD    not updated
                                     in PTD                   in PTD


                 Further, 28 additional grants 5 not included in the audit sample with grant amounts
                 totaling $15.7 million reported blank target closeout dates in the PTD.

                 Additionally, ONAP’s PTD reporting functions were not always reliable. We
                 reviewed five PTD reports related to grant closeout oversight that were included
                 as part of the standard database interface and were available for use by ONAP
                 managers. The reports included a total of 686 duplicate records, 62 inaccurate
                 records, 2 missing records, and 223 nonessential records. This condition occurred
                 because the queries used to generate the reports were not properly designed. For
                 example, in some cases fields were incorrectly calculated and records were not
                 correctly grouped when attempting to summarize records for single grants.
                 ONAP could enhance the usefulness of its reports and increase the efficiency of


5
  The 28 grants were identified within the universe of grants reviewed for the audit sample. As stated in the scope
and methodology section, this included a total of 272 open grants totaling more than $208.8 million.



                                                         7
           its controls over grant closeouts by correcting the deficiencies within the PTD
           reports related to the ICDBG closeout process.

ONAP’s PTD Did Not Track
the Status of Grants That
Appeared To Be Overdue for
Closeout

           The PTD did not include sufficient information that ONAP headquarters, ONAP
           area office management, or auditors could use to readily determine which grants
           were overdue for closeout and whether appropriate follow-up action was being
           pursued for these cases. For example, the PTD did not include a field indicating
           whether ONAP had taken action to determine the grants’ closeout eligibility.

           Our review of the PTD identified a significant number of grants that exhibited
           indications of closeout eligibility; however, the PTD did not include information
           to document the status of these grants and whether ONAP had taken action to
           address the possible overdue grant closeout. For example, 49 grants remained
           open more than 90 days past the target closeout date, 36 open grants reported
           blank target closeout dates, 30 grants remained open after more than 5 years, and
           35 grants remained open yet had been 100 percent drawn down for at least 6
           months.


                                Grants exhibiting closeout
                                        eligibility
            60
            50
            40
            30
                        49                                                              Grants
            20                           36               30               35
            10
             0
                  Remained open      Open grants     Remained open Remained open
                 more than 90 days reported a blank more than 5 years yet had been
                   beyond target    target closeout                  100% drawn down
                   closeout date         date                          for at least 6
                                                                          months


           Because the PTD did not indicate whether ONAP had taken follow-up action to
           address the indications of closeout eligibility for these cases, ONAP management
           could not readily determine whether appropriate follow-up action had been taken.
           Including a field in the PTD to track the most recent ONAP follow-up action for
           grants that appear to be overdue for closeout would increase the efficiency of
           management’s oversight of the grant closeout process. This information would




                                              8
             reduce the amount of manual research required to determine whether timely
             follow-up action had been taken to address indications of overdue closeout.

Conclusion

             ONAP lacked adequate controls over the ICDBG closeout process, including
             written policies and procedures for managment oversight and reliable, relevant,
             and accurate PTD data. This condition occurred because ONAP previously did
             not prioritze grant closeouts and did not design sufficient oversight procedures to
             consistently monitor grant closeout eligibility. As a result, ONAP did not always
             initiate timely follow-up action to determine grant closeout eligibility, and
             management lacked sufficient tracking data to efficiently monitor grant
             closeouts.

Recommendations

             We recommend that HUD’s Deputy Assistant Secretary for the Office of the Native
             American Programs

             1A.    Develop and implement policies and procedures establishing minimum
                    standards for management oversight of the ICDBG closeout process,
                    resulting in $3,999,995 being put to better use, ensuring that unexpended
                    or ineligible funding amounts for future grants are determined and
                    recaptured within required timeframes.

             1B.    Review PTD closeout and target closeout dates for open grants and
                    correct inaccurate or missing data.

             1C.    Evaluate management’s need for PTD reports and correct deficiencies
                    within applicable PTD reports, including missing, duplicate, or inaccurate
                    records to ensure adequate information is available for management’s
                    oversight of the grant closeout process.

             1D.    Consider adding a field in the PTD to indicate the status of ONAP follow-
                    up actions for grants that appear to be overdue for closeout.




                                              9
                          SCOPE AND METHODOLOGY

We reviewed the ONAP’s ICDBG program closeout process based on information received from
the Southwest ONAP indicating that ONAP may not have been closing out grants within
required timeframes. Our review generally covered ONAP procedures related to the ICDBG
closeout process during the period January 2007 through November 2013. We performed our
audit from November 2013 to June 2014 at the Office of Inspector General (OIG) Phoenix
Office of Audit. However, we contacted ONAP officials and ONAP field offices remotely via
teleconference.

To accomplish our objective, we:

      •   Reviewed applicable ONAP regulations, including 24 CFR Part 1003 6 and the ICDBG
          Grants Management Business Process Manual (October 2011); 7

      •   Interviewed ONAP management at each of the six ONAP field offices;

      •   Obtained and analyzed a copy of ONAP’s PTD ; and

      •   Selected and reviewed a targeted sample of 58 grants to evaluate ONAP’s control over
          the ICDBG closeout process.

During our audit period, 523 program grants totaling more than $372.9 million were funded. For
our review of ONAP’s grant closeout process, we limited the sample universe to grants reported
as open as of November 7, 2013, the date we obtained the PTD for review. The sample
universe included 272 open grants totaling more than $208.8 million. The 58 sample items were
selected based upon indications within the PTD that the grant could be overdue for closeout. For
example, grants were selected with consideration given to the percentage of funds drawn; the
timing of reported draws, and the time elapsed since reported target closeout dates. The sample
selection process was not designed to identify all possible overdue grant closeouts, and in some
cases, grants may have been overdue yet were not selected for the sample. The sample results
demonstrate examples of noncompliance that resulted from the control deficiencies identified in
the audit finding yet cannot be projected to estimate an error or compliance rate for the
population of grants.

We relied on data maintained by ONAP in its PTD to identify grants funded during the audit
period and the associated grant amounts. We determined that the computer-processed data used
were sufficiently reliable for our purposes. To assess the reliability of data within the PTD, we
selected and reviewed a random sample of 15 grants (and 145 associated individual draws) from
the audit sample and verified that the reported draw data matched information obtained directly
from HUD’s Line of Credit Control System. We also interviewed ONAP staff familiar with the
design and operation. PTD data for each of the sample selections were validated as part of the

6
    See appendix D.
7
    See appendix D.


                                                10
sample review process by reviewing documents supplied by ONAP. Although we determined
that the data were sufficiently reliable for identifying grants and associated draw amounts during
the audit, we note in the audit report that our sample testing identified inaccurate or missing
dates within the . This audit report includes a recommendation that ONAP correct these data for
management control purposes.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                                11
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.


 Relevant Internal Control

               We determined that the following internal control was relevant to our audit
               objective:

                          •   Control over the ICDBG closeout process.

               We assessed the relevant control identified above.

               A deficiency in internal control exists when the design or operation of a control does
               not allow management or employees, in the normal course of performing their
               assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
               impairments to effectiveness or efficiency of operations, (2) misstatements in
               financial or performance information, or (3) violations of laws and regulations on a
               timely basis.

 Significant Deficiency

               Based on our review, we believe that the following item is a significant deficiency:

                          •   ONAP lacked adequate controls over the ICDBG closeout process
                              (finding).




                                                 12
                                        APPENDIXES

Appendix A

           SCHEDULE OF FUNDS TO BE PUT TO BETTER USE

                      Recommendation                           Funds to be put
                          number                               to better use 1/
                            1A                                   $3,999,955


1/        Recommendations that funds be put to better use are estimates of amounts that could be
          used more efficiently if an OIG recommendation is implemented. These amounts include
          reductions in outlays, DE obligation of funds, withdrawal of interest, costs not incurred
          by implementing recommended improvements, avoidance of unnecessary expenditures
          noted in prewar reviews, and any other savings that are specifically identified. In this
          instance, the estimated funds to be put to better use for recommendation 1A represent
          grant amounts associated with the four sample grants totaling $3,999,955 8 that were
          eligible for closeout yet remained open at the time of our audit without timely follow-up
          action to pursue grant closeout. Because ONAP did not take timely action to determine
          the status of these grants, HUD lacked appropriate and timely assurance that funds
          awarded for the projects were accounted for and expended for eligible purposes. By
          implementing the audit recommendations, HUD will ensure that unexpended or ineligible
          funding amounts for future grants are determined and recaptured within required
          timeframes. Further, implementing the recommendations will ensure that untimely grant
          closeouts are identified in a timely manner and appropriately factored into the grant
          award ranking process to prevent the expenditure of future grant funds for grantees that
          would be excluded if not for the untimely consideration the grantees’ closeout
          performance history.




8
    See appendix C.


                                                 13
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




Comment 2




                         14
15
                         OIG Evaluation of Auditee Comments

Comment 1   ONAP disagrees with the report’s implied conclusion that if grant close out was
            not delayed then any unexpended or ineligible funding could be reallocated to
            another project/grantee. Although ONAP is correct in its assessment regarding
            the reallocation of funds, the audit report does not reference nor imply that the
            reallocation of the ICDBG grant funds with cases that were not delayed could be
            allocated to another project/grantee. Recapture of funds by the Treasury and
            subsequent reallocation would still constitute funds to be put to better use, even if
            the reallocation was to another Agency or HUD program.

            As stated in appendix A, the estimated funds to be put to better use represent
            grants that were eligible for closeout yet remained open at the time of our audit
            without timely follow-up action to pursue grant closeout. Because timely action
            to determine the status was not taken, HUD lacked appropriate and timely
            assurance that the funds were accounted for and expended for eligible purposes.
            By implementing the audit recommendations, HUD will ensure that unexpended
            or ineligible funding amounts for future grants are determined and recaptured
            within required timeframes. Further, implementing the recommendations will
            ensure that untimely grant closeouts are identified in a timely manner and
            appropriately factored into the grant award ranking process to prevent the
            expenditure of future grant funds for grantees that would be excluded if not for
            the untimely consideration the grantees’ closeout performance history.

Comment 2   ONAP disagrees with the conclusion that PTD errors or omissions in any way
            precluded timely follow up or the efficient monitoring of grant closeouts. In its
            response, ONAP detailed specific financial reports that are utilized to review
            grantee expenditures. While we agree these reports are useful, they do not focus
            and address the target closeout dates, which was the focus of the audit finding.

            As explained in the audit report regarding review procedures, OIG was aware that
            the managers at the area ONAP offices periodically reviewed the SF-425 Federal
            Financial Report, LOCCS and Annual Status and Evaluation Report. However,
            our review disclosed that management’s monitoring reviews were not always
            effective because emphasis was not placed on the target closeout date. We
            determined there were no controls in place to consistently monitor ICDBG grant
            closeout date requirements and readily identify expired target close out dates.

            Since ONAP relies on the PTD to monitor ICDBG target closeout dates, the PTD
            should maintain accurate data. If adequate monitoring is not performed, ONAP
            offices may not have accurate data in the PTD that is critical to the ICDBG
            program closeout process, ensuring compliance with applicable laws and
            regulations. HUD needs this information in order to make informed judgments
            regarding a grantee’s capacity to carry out approved activities.




                                             16
Appendix C

             DETAILED RESULTS OF OIG’S REVIEW

                                                                       Grant amounts
                          No timely follow-up
     Grantee -    Grant                                                  for grants
                           to determine status        PTD inaccurate
   grant number   year                                                  eligible for
                          or closeout eligibility
                                                                          closeout
                               Eastern Woodlands ONAP
   B07SR280260    2007             X                                     $600,000
   B08SR370566    2008                                      X
   B09SR271876    2009                                      X
   B08SR272666    2008              X                       X
   B09SR231390    2009                                      X
   B10SR272666    2010              X                       X
   B07SR263640    2007              X                       X            $599,955
   B08SR263078    2008              X                       X
   B09SR554910    2009              X                       X
   B07SR232452    2007              X
   B10SR265044    2010                                      X
   B12SR265044    2012                                      X
   B10SR365716    2010                                      X
   B09SR250521    2009              X                       X            $600,000
                                    Northwest ONAP
   B10SR530697    2010
   B10SR531270    2010              X
   B07SR531832    2007
   B09SR531490    2009             X
                                 Northern Plains ONAP
   B08SR300188    2008                                      X
   B11SR300646    2011
   B10SR460434    2010              X
   B10SR461340    2010                                      X
   B08SR461448    2008              X
   B08SR380001    2008              X                       X
   B09SR491276    2009              X
   B10SR491276    2010
                                        Alaska ONAP
   B10SR020015    2010
   B10SR020056    2010
   B10SR020009    2010
   B08SR020032    2008



                                             17
                                                                     Grant amounts
                         No timely follow-up
  Grantee -      Grant                                                 for grants
                          to determine status       PTD inaccurate
grant number     year                                                 eligible for
                         or closeout eligibility
                                                                        closeout
                                Southern Plains ONAP
B08SR400578      2008
B11SR400586      2011
B08SR400596      2008
B12SR201708      2012                                     X
B10SR400724      2010
B10SR400724      2010
                                   Southwest ONAP
B10SR040302      2010              X                                   $2,200,000
B10SR350531      2010                                     X
B08SR063428      2008              X                      X
B08SR350445      2008              X
B07SR062180      2007                                     X
B07SR350522      2007
B07SR062779      2007
B07SR350306      2007                                     X
B08SR060356      2008
B08SR350318      2008              X                      X
B09SR350124      2009                                     X
B07SR062474      2007
B08SR040281      2008
B07SR040281      2007
B10SR060350      2010
B08SR350294      2008                                     X
B07SR040218      2007
B09SR042509      2009
B10SR061864      2010
B08SR040224      2008
B07SR040224      2007
B08SR040008      2008
B10SR060003      2010                                     X

        Totals                     18                    24           $3,999,955




                                            18
Appendix D

                                         CRITERIA

24 CFR 1003.301, Selection Process
(a)   Threshold requirement. An applicant that has an outstanding ICDBG obligation to HUD
      that is in arrears, or one that has not agreed to a repayment schedule will be disqualified
      from the competition.

24 CFR 1003.508, Grant Closeout Procedures
(a)   Criteria for closeout. A grant will be closed out when the Area ONAP determines, in
      consultation with the grantee, that the following criteria have been met:
      (1)     All costs to be paid with ICDBG funds have been incurred, with the exception of
              closeout costs (e.g., audit costs) and costs resulting from contingent liabilities
              described in the closeout agreement pursuant to paragraph (c) of this section.
              Contingent liabilities include, but are not limited to, third-party claims against the
              grantee, as well as related administrative costs.
      (2)     With respect to activities which are financed by means of escrow accounts, loan
              guarantees, or similar mechanisms, the work to be assisted with ICDBG funds has
              actually been completed.
      (3)     Other responsibilities of the grantee under the grant agreement and applicable
              laws and regulations appear to have been carried out satisfactorily or there is no
              further Federal interest in keeping the grant agreement open for the purpose of
              securing performance.

(b)    Closeout actions.
       (1)   Within 90 days of the date it is determined that the criteria for closeout have been
             met, the grantee shall submit to the Area ONAP a copy of the final status and
             evaluation report described in §1003.506(a) and a completed Financial Status
             Report (SF [standard form]-269). If acceptable reports are not submitted, an audit
             of the grantee’s program activities may be conducted by HUD.
       (2)   Based on the information provided in the status report and other relevant
             information, the grantee, in consultation with the Area ONAP, will prepare a
             closeout agreement in accordance with paragraph (c) of this section.
       (3)   The Area ONAP will cancel any unused portion of the awarded grant, as shown in
             the signed grant closeout agreement. Any unused grant funds disbursed from the
             U.S. Treasury which are in the possession of the grantee shall be refunded to
             HUD.
       (4)   Any costs paid with ICDBG funds which were not audited previously shall be
             subject to coverage in the grantee’s next single audit performed in accordance
             with 24 CFR part 44. The grantee may be required to repay HUD any disallowed
             costs based on the results of the audit, or on additional HUD reviews provided for
             in the closeout agreement.




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(c)   Closeout agreement. Any obligations remaining as of the date of the closeout shall be
      covered by the terms of a closeout agreement. The agreement shall be prepared by the
      grantee in consultation with the Area ONAP. The agreement shall identify the grant
      being closed out, and include provisions with respect to the following:
      (1)    Identification of any closeout costs or contingent liabilities subject to payment
             with ICDBG funds after the closeout agreement is signed;
      (2)    Identification of any unused grant funds to be canceled by HUD;
      (3)    Identification of any program income on deposit in financial institutions at the
             time the closeout agreement is signed;
      (4)    Description of the grantee’s responsibility after closeout for:
             (i)      Compliance with all program requirements, certifications and assurances
                      in using program income on deposit at the time the closeout agreement is
                      signed and in using any other remaining ICDBG funds available for
                      closeout costs and contingent liabilities;
             (ii)     Use of real property assisted with ICDBG funds in accordance with the
                      principles described in §1003.504; and
             (iii) Ensuring that flood insurance coverage for affected property owners is
                      maintained for the mandatory period;
      (5)    Other provisions appropriate to any special circumstances of the grant closeout, in
             modification of or in addition to the obligations in paragraphs (c)(1) through (4)
             of this section. The agreement shall authorize monitoring by HUD, and shall
             provide that findings of noncompliance may be taken into account by HUD as
             unsatisfactory performance of the grantee in the consideration of any future grant
             award under this part.

(d)   Termination of grant for convenience. Grant assistance provided under this part may be
      terminated for convenience in whole or in part before the completion of the assisted
      activities, in accordance with the provisions of 24 CFR 85.44. The grantee shall not incur
      new obligations for the terminated portions after the effective date, and shall cancel as
      many outstanding obligations as possible. HUD shall allow full credit to the grantee for
      those portions of obligations which could not be canceled and which had been properly
      incurred by the grantee in carrying out the activities before the termination. The closeout
      policies contained in this section shall apply in such cases, except where the approved
      grant is terminated in its entirety. Responsibility for the environmental review to be
      performed under 24 CFR part 50 or 24 CFR part 58, as applicable, shall be determined as
      part of the closeout process.

(e)   Termination for cause. In cases in which HUD terminates the grantee’s grant under the
      authority of subpart H of this part, or under the terms of the grant agreement, the closeout
      policies contained in this section shall apply, except where the approved grant is canceled
      in its entirety. The provisions in 24 CFR 85.43(c) on the effects of termination shall also
      apply. HUD shall determine whether an environmental review is required, and if so,
      HUD shall perform it in accordance with 24 CFR part 50.




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ICDBG Grants Management Business Process Manual
12.1.1 Documents Required
       The GMS [Grants Management System] must receive the following documents from the
       tribe, within 90 days of completion of grant activities (or when the criteria have been
       met).
       •       The final Federal Financial Report (SF-425);
       •       The final Status and Evaluation Report
       •       In addition, the GMS should review the closeout documents for completeness to
               determine whether:
       •       The documents are signed by the appropriate official(s);
       •       The dollar amounts reflected on form SF-425 are consistent with the latest
               approved Cost Summary, the final Status and Evaluation Report, the Closeout
               Agreement, and Line of Credit Control System (LOCCS); and
       •       Other resource contributions identified in the approved application are included
               on form SF-425.
       If any of the required documents is not submitted on time, the GMS should follow-up
       with the tribe by telephone and/or mail. The GMS should also contact the tribe and
       request corrected documents if any deficiencies are found.

12.1.2 Unused Balances
       The GMS should print the grant’s LOCCS Q08 screen to determine if all funds have been
       drawn down. If there is a balance, the Area ONAP must cancel any unused portion of the
       awarded grant, as agreed to in the signed grant Closeout Agreement. Any unused grant
       funds disbursed from the U.S. Treasury that are in the possession of the recipient must be
       refunded to HUD. Any costs paid with ICDBG funds that were not audited previously
       shall be subject to coverage in the grantee’s next Single Audit performed in accordance
       with Section 44. The recipient may be required to repay HUD any disallowed costs
       based on the results of the audit, or on additional HUD reviews provided for in the
       Closeout Agreement. Area ONAPs must also de-obligate any remaining ICDBG funds in
       the grant in accordance with the Administrative Control of Funds Plan.

12.2   Closeout Agreement
       If the documents submitted by the grantee demonstrate that the regulatory criteria for
       closeout have been met, the GMS should prepare for Area Administrator signature, a
       letter informing the grantee of such.

       The ICDBG regulation requires grantees to agree to certain final tasks and obligations
       resulting from the federal grant. A sample Closeout Agreement (which should be printed
       by the grantee on tribal letterhead) should be included with the Initiation of Closeout
       Letter to the grantee. The agreement must clearly identify the grant being closed out, and
       include provisions with respect to the following:
       •       Any obligations remaining as of the date of the closeout;
       •       Identification of any closeout costs or contingent liabilities subject to payment
               with ICDBG funds after the Closeout Agreement is signed;
       •       Identification of any unused grant funds to be cancelled by HUD;



                                               21
•   Identification of any program income on deposit in financial institutions at the
    time the Closeout Agreement is signed;
•   Description of the recipients responsibility after closeout;
    •       Compliance with all program requirements, certifications and assurances
            in using program income on deposit at the time the closeout agreement is
            signed and in using other remaining ICDBG funds available for closeout
            costs and contingent liabilities;
    •       Use of real property assisted with ICDBG funds in accordance with the
            principles described in §1003.504; and
    •       Ensuring that flood insurance coverage for affected property owners is
            maintained for the mandatory period;
•   Other provisions appropriate to any special circumstances of the grant closeout;
•   Authorize monitoring by HUD; and
•   Provide that findings of non-compliance may be taken into account by HUD as
    unsatisfactory performance of the recipient in the consideration of any future
    grant award.




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