KEYS TO

EFFECTIVE GRANT

ADMINISTRATION

CDBG Disaster Recovery

• 4 Keys to Effective Grant Administration

– Assessing Capacity (including your partner’s capacity)

– Procurement

– Monitoring

– Financial Controls and Procedures

CDBG Disaster Recovery

• Grant Management History

• Staffing

• Financial and Tracking Systems

• Contractor Oversight

• Final Assessment—Hire Internally or ContractOut?

Assessing Capacity

Subrecipient or Contractor?

• What is a Subrecipient?

Public or private nonprofit agency, authority ororganization, or community-based developmentorganization, receiving CDBG funds from the recipient toundertake CDBG eligible activities (see 24 CFR 570.500(c))

Procurement

• Designated by thegrantee.

• Federal administrativeand monitoringrequirementsdescribed in 24 CFRParts 84 and 85.

• Must be selected through acompetitive procurementprocess.

• Must achieve performancegoals identified in thecontract.

Subrecipient Contractor

Selection

Monitoring&

Performance

Monitoring/Oversightfor Disaster Recovery

Using CDBG Disaster Recovery funds, both state and local governmentsmay carry out eligible activities directly through employees orcontractors or award funds to other local governments andsubrecipients, as applicable.

In all cases, the grantee must oversee compliance with

• Eligibility of activities through regulations and waivers• National Objectives, including different conditions for Urgent Need• Identification of how activity addresses a need from the Disaster• Prevention of duplication of benefits from FEMA, SBA, Insurance,

and other sources

Components of Monitoring/Oversight forDisaster Recovery

• Procurement and Performance Review – Activities undertaken through contractorsmust achieve performance goals and still ensure compliance with applicable federalrequirements

• Technical assistance- A description of how the grantee will provide for increasing thecapacity of grant recipients, subrecipients, subgrantees, and any other entityresponsible for administering activities under this grant

• Internal audit function – A function reporting independently to the chief officer orboard of the governing body of any designated administering entity that evaluatesoperations to prevent fraud, waste, or abuse

• Reporting efforts to prevent fraud, abuse, and mismanagement of funds- Screensare in DRGR to identify monitoring, audit, and technical assistance and summary isincluded summarized quarterly in its performance report to HUD

• Monitoring standards and procedures – Grantee should include process to identifyand tie to disaster and non-duplication of benefits

What does HUD look for when reviewing GranteeMonitoring/Oversight?

Each grantee must have

• A method to select recipients for review

• Evidence that the frequency of review is adequate

• Evidence that the review by the State examined allnecessary items

• Evidence to support the grantee’s monitoring/reviewconclusions reached

• Evidence that the results of reviews, particularly negativefindings, were communicated to localgovernments/subrecipients

What does HUD look for when reviewing GranteeMonitoring/Oversight?

• Grantees must maintain records to determine whether the program isbeing carried out in accordance with the grantee's certifications, therequirements of the HCDA, and other applicable laws.

• Grantees are required to conduct reviews of (sub)recipients/localgovernments to ensure compliance with applicable laws.

• HUD expects grantees to review contracts to ensure contract deliverablesand milestones will be tracked and met to demonstrate reasonableness ofcosts.

• Grantees use the DRGR Admin Module to capture the status of theirmonitoring events.

• Records demonstrate that the State has conducted reviews sufficient forthe grantee to determine whether subrecipients/local governments are incompliance.

CPD MONITORING HANDBOOK:Sample Exhibits for Monitoring CDBG DR Grantees

HUD encourages grantees to review the CPD Monitoring Handbook posted onHUD’s website to understand what HUD reviews during grantee monitoringvisits.

The tool includes monitoring checklists on core disaster recovery topics:

Buyouts New Construction of Housing

Infrastructure Economic Development

Written Agreements Procurement1

Housing Repair, Rehabilitation, and Reconstruction

Financial Controls

• Financial management regulations

– Title 24, Part 570 of the Code of Federal Regulations:Housing and Urban Development (CDBG regs)

– Title 24, Part 85: Administrative Requirements ForGrants And Cooperative Agreements To State, LocalAnd Federally Recognized Indian Tribal Governments(or the state’s equivalent)

– OMB Circular A-87, Attachment C, State/Local-WideCentral Service Cost Allocation Plans

– OMB Circular A-133 Single Audit

Financial Controls (cont.)

• CDBG regulations require grantees the followingfinancial controls :

• project costs are reasonable

• sources of project financing are committed

• CDBG funds are not substituted for non-Federal financialsupport

• project is financially feasible

• funds are disbursed on a pro rata basis with other financesprovided to the project

• grantees maintain sufficient records to demonstrate thestate has met the standard requirements

Financial Controls (cont.)

• CDBG Grant Administration require granteesto ensure

• amounts budgeted are for eligible activities

• funds are obligated when contracts are executed;purchase orders issued

• access to information on obligations readily available

• grantees maintain adequate source documentation

• sample of expenditures are reviewed to determinewhether they are supported by invoices, contracts, orpurchase orders

Financial Controls (cont.)

Internal Controls• Organizational chart demonstrates established lines

of responsibility/approving authorities

• Key employees duties are well defined

• Approval controls provide reasonable assurance thatappropriate individuals approve transactions

• Transactions and events are properly documented,recorded, and auditable

Financial Controls (cont.)

• Administrative Costs– All funds have been spent only for reasonable and

necessary costs of program operation; and– Program funds have not been used for general

expenses of state or local government

• Procedures– Procedures support the ability to prepare financial

statements are fairly presented in– Financial statements conform with generally accepted

or other relevant and appropriate accountingprinciples and regulatory requirements

Financial Controls (cont.)

• Grantees and subrecepients that receive disasterrecovery funds must

– Comply with applicable Federal, state and local laws,regulations, standards, and procedures

– Conduct financial management methods andprocedures in accordance with Generally AcceptedGovernment Auditing Standards (GAGAS)

• Grant administrators must prepare accurate and timelyreports

• Grantees must monitor all financial managementpractices

Financial Controls (cont.)

• Administrative Costs – Salaries/Wages and Indirect Costs

– Charges for salaries and wages must be based on payrolls documentedand approved by a responsible official(s) of the governmental unit

– Salaries and wages where employees are expected to work solely on asingle federal award will be supported by periodic certifications thatthe employees worked solely on that program for the period coveredby the certification

– Indirect costs must be billed in accordance with an approved CostAllocation Plan or agreed upon Indirect Cost Rate pursuant to OMBCircular A-87, Attachment A, Section F

Financial Controls (cont.)

OMB Circular A-133 Single Audits

• Participants (or subrecipients) that expend more than$500,000 in Federal funds must have a single auditconducted

• Participant’s A-133 audit report must include– an opinion on whether the financial statements conform with

generally accepted accounting principles

– whether the participant has complied with the laws,regulations, and provisions of contracts or grant agreements

• Participant’s must implement corrective actions toresolve findings

Effective Grant Administration