Report 2014-037 Recommendation 6 Responses

Report 2014-037: California Department of Housing and Community Development: Inconsistent Oversight Has Resulted in the Questionable Use of Some Housing Bond Funds (Release Date: September 2014)

Recommendation #6 To: Housing and Community Development, Department of

To ensure that recipients spend advanced funds promptly and that it has accurate information about outstanding advanced funds, HCD should do the following:

- Reconcile advances to its accounting records and to documentation to ensure that recipients spent all of the advances that HCD made previously.

Agency Response*

The DFA CalHome program has updated their desk manual (pg 54) to reflect the change that staff must ensure status reports are current and reconciliation is required prior to disbursing additional funds. This issues is fully implemented.

  • Response Type†: 1-Year
  • Completion Date: September 2015
  • Response Date: September 2015

California State Auditor's Assessment of Status: Fully Implemented

Agency Response*

The BEGIN Program updated its desk manual to include the Mortgage Draw Request process to ensure that recipients spend all advances previously made (AF6a-1, red text). All BEGIN funds have been reconciled. Staff track and monitor draws and usage of advances and reimbursements via the Borrower Summary (reconciliation) as draw requests are received from the Awardee (AF6a-2). Required reporting is tracked through a log (AF6a-3). CalHome implemented a Management Memo outlining its advanced funds policy (AF6b-1), and updated its desk manual with staff instructions on the new policy for unused advanced funds (AF6b-2, red text). Staff use the Borrower Summary (reconciliation) to track, monitor, and account for use of advances (AF6b-3). Management has implemented the Draw Tracking log to monitor available funds and current reporting status in administering the new policy that no request for funds will be processed until a recipient is current (AF6b-4). Management has implemented the Award Usage report to monitor and track the status of advanced fund usage that were issued greater than 180 days since the date the report is generated.

  • Response Type†: 6-Month
  • Completion Date: February 2015
  • Response Date: March 2015

California State Auditor's Assessment of Status: Partially Implemented

Although HCD provided documentation that it is tracking and reconciling its advances for its BEGIN program, the documentation provided for its CalHome program does not show that the advances are being reconciled with its accounting records.

  • Auditee did not substantiate its claim of full implementation

Agency Response*

The BEGIN Program is revising its Mortgage Assistance Draw Request process in the BEGIN Desk Manual (pages 9-11) to address advances over 90 days. BEGIN program staff has worked diligently to reconcile all outstanding balances, and are close to full reconciliation.

For the CalHome program, DFA staff and management are reviewing current regulations to ensure the appropriate controls are in place for the continued efficient and effective administration of advances.

  • Response Type†: 60-Day
  • Estimated Completion Date: 12/16/2014
  • Response Date: November 2014

California State Auditor's Assessment of Status: Pending

All Recommendations in 2014-037

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.

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