1. Audit of Grants Management ABSTRACT
Grant management activities are decentralized.
'� Adoption of a City-wide grant policy would bring
consistency and control over grants activities. In
addition, improvement in controls and record
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Internal Audit Department
AUDIT OF GRANTS
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Table of Contents
Auditat a Glance ...............................................................................................................................3
Introduction ......................................................................................................................................4
ManagementResponsibility.....................................................................................................................4
Audit Objectives, Scope, and Methodology..............................................................................................4
Background...............................................................................................................................................5
Glossaryof Grants.....................................................................................................................................6
WhatWorks Well...............................................................................................................................8
Subrecipient Monitoring Activities were Effectively Managed ................................................................8
Opportunities for Improvement.......................................................................................................10
GFOABest Practices................................................................................................................................10
Engineering Services Grants....................................................................................................................13
FireGrants...............................................................................................................................................15
Community Development Grants...........................................................................................................17
PoliceGrants...........................................................................................................................................19
Appendix A: Management Response Summary.................................................................................22
Appendix B: GFOA Recommended—COSO Internal Control Framework............................................26
Appendix C: Management Letter to Other Departments ...................................................................27
Appendix D: Management Letter to the Fire Department..................................................................29
Appendix E: Management Letter to the Police Department..............................................................31
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Audit at a Glance
Why we did this Audit: What we Found:
Between fiscal years 2016-17 and In general, this audit reviewed grant administration
2018-19, the City of Denton received and management processes for eight City
$58.5 million in grants funding from departments including the four with significant grant
several State and Federal agencies. In funding: Engineering Services, Community
order to continue receiving these Development, Fire, and Police. The Finance
funds, the City must ensure that it Department has recently begun developing a City-
complies with all grant conditions and wide grant directive which should be implemented in
requirements. This audit was the next few months. Findings are summarized below:
included on the City's fiscal year
2019-20 Audit Plan as approved by Decentralization. Grant management activities are
the City Council. decentralized throughout the City and are further
decentralized in the Engineering, Fire, and Police
What we Recommend: departments. This has resulted in grant information
being difficult to retrieve or lost in some departments.
Recommendation 1 Centralization of grants information would facilitate
Finance should incorporate best reporting and may help staff manage projects more
practices into the proposed grant effectively in the future by providing a reference .
policy.
Unclear Grant Conditions & Requirements. In two of
Recommendations 3, 6, & 10 the departments reviewed, Fire& Police, not all grants
Engineering, Fire, & Police should or funding programs had a document outlining the
deveop a process for centrally sharing grant's requirements or conditions. Without these
grants information with their documents, departments risk not complying with
department's Grant Administrator. grants conditions which could result in the rejection of
reimbursement requests or loss of grant funding.
Recommendations 4& 8
Fire & Police should formalize the Departmental Policies and Procedures Needed. The
process and authority for approving Departments reviewed, with the exception of
grants and entering into a Community Development, do not always have
memorandum of understanding or established processes for managing their grants and
agreement to ensure grant funding programs. Establishing grant administration
conditions are documented. processes and clearly defining roles for those involved
would reduce the likelihood of unintentional errors,
Recommendations 2, 5, &9 improve consistency, and help retain institutional
Engineering, Fire, & Police should knowledge. Key controls include: defined approval
establish procedures and define authority, supervisory reviews for allowability, clear
responsibilities for managing all reporting requirements and responsibility, and
grants and funding programs. reviews of reimbursement submissions by
Accounting.
Recommendation 7 -
Community Development should
codify the grant expense and
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reimbursement review process by DENTON tw
the City s Grant Accountant.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Introduction
The City Auditor is responsible for providing: (a) an independent appraisal' of City operations to
ensure policies and procedures are in place and complied with, inclusive of purchasing and
contracting; (b) information that is accurate and reliable; (c) assurance that assets are properly
recorded and safeguarded; (d)assurance that risks are identified and minimized; and (e)assurance
that resources are used economically and efficiently and that the City's objectives are being
achieved.
The Internal Audit Department has completed a performance audit of the grants management
process.We conducted this performance 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 objectives. We believe that the evidence obtained provides a reasonable basis
for our findings and conclusions based on our audit objectives.
Management Responsibility
City management is responsible for ensuring that resources are managed properly and used in
compliance with laws and regulations; programs are achieving their objectives; and services are
being provided efficiently, effectively, and economically.
Audit Objectives, Scope, and Methodology
This report is intended to provide assurance that the City's resources are being used economically
and efficiently by evaluating the effectiveness of controls over grants management and
administration activities.
Audit fieldwork was conducted during February and March of 2020. The scope of review varied
depending on the procedure being performed. The following list summarizes major procedures
performed during this time:
• Reviewed documentation to develop criteria including industry standards, best practices,
policies, and procedures,
• Developed process narratives for the Community Development, Fire, and Police departments
to identify current control activities that were certified by the respective staff handling grant
administration activities;
• Obtained the details of grant revenues received during the last three fiscal years and selected
a sample of grants based on revenue recorded in the books of account;
• Reviewed grant application and management policies and procedures and interviewed
department staff for selected grants;
• Reviewed the expenditures and reimbursements of selected grants to determine the adequacy
of internal controls concerning the allowability of expenditures and claiming of
reimbursements; and b.°
'The City of Denton's Internal Audit Department is considered structurally independent as defined by generally accepted government auditing
standard 3.56.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
• Identified and verified compliance with conditions of selected grants and applicable laws and
regulations.
Background
GrantS2 are financial assistance given by a government, organization, or person for the
accomplishment of specific purposes or activities. The City of Denton is awarded grants for a wide
variety of activities such as community development services, law enforcement, homeland
security, public safety, public services, recreation, infrastructure improvement, and maintenance.
Grants are utilized throughout the City's departments based on the requirements and available
opportunities.The City has earned grant revenues during the last three fiscal years as given below:
Figure 1: Federal and State Grants (FY17 through FY19)
$30,000,000
■Federal ■State
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
2016-17 2017-18 2018-19
This audit covers an overview of the grant application and management processes in the City.The
grant application and management activities of the City's departments have generally been divided
into three phases:
Figure 2: Phase-wise Grant Activities
Pre-Award Phase Award Phase Post-Award Post-Award Phase
•Identification -Approval *Execution
•Eligibilty *Monitoring
•Application •Reporting&
Compliance
Departments identify grant opportunities based on their needs and apply for grants subject to their
eligibility and the respective grant's requirements. After approval of grants, departments execute
and manage grants under the grant's conditions and compliance requirements.
Departments' assigned personnel are responsible for the overall grants' execution and Ln
management activities such as preparing financial reports, preparing and submitting drawdowns,
z Includes money received by City departments under different funding programs and agreements with various federal and state agencies and
governments.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
and monitoring grants expenditures and grants' activities. Supervisory level personnel are
ultimately responsible for ensuring that grants are managed per the grant agreement, conditions,
and applicable regulations.
Accounting also plays an important role in grants management and administration activities. The
Accounting Division has a fully devoted Grant Accountant for grant accounting and financial
reporting activities. City departments coordinate with the Grant Accountant for grants
administration activities. The Grant Accountant reviews the reimbursement claims and reconciles
the expenses incurred under the grant from time to time.The Accounting Division also coordinates
with the external auditors for the federally required Single Audit of grants conducted annually.
Glossary of Grants
The following glossary of grants has been provided as reference material:
Ambulance Services Uncompensated Care Cost Program authorizes governmental ambulance providers to
claim uncompensated care costs.
Chapter 59 Asset Forfeiture Award Program of the Texas Code of Criminal Procedures provides provisions
for the use of proceeds and property forfeited to law enforcement agencies.
Community Development Block Grant Program provides annual grants on a formula basis to states, cities,
and counties to develop viable urban communities by providing decent housing and a suitable living
environment and by expanding economic opportunities, principally for low-and moderate-income persons.
Dallas/Fort Worth/Arlington (D/FW/A) Urban Area Security Initiative(UASI)State Homeland Security Grant
Program is run by the Texas Office of the Governor to support state and local agencies in their efforts to
prevent terrorism and other catastrophic events.
Domestic and Sexual Violence Initiative Grant funds increased efforts to identify, address, and prevent
gender bias in response to an investigation of sexual assault and domestic violence, including stalking as
well as domestic and sexual violence perpetrated by law enforcement.
Emergency Management Performance Grant (EMPG) Program provides Federal funds to states to assist
state, local, territorial, and tribal governments in preparing for all hazards.
Emergency Solutions Grant (ESG) program provides funding to engage homeless individuals and families
living on the street, improve the number and quality of emergency shelters for homeless individuals and
families, and other related purposes.
High Speed Grinder& Low Speed Shredder Grants help to acquire a 'High Speed Grinder' and 'Low Speed
Shredder'for the City's use for source reduction and recycling operations to increase operational efficiency.
HOME Investment Partnerships Program (HOME) provides formula grants to states and localities that
communities use — often in partnership with local nonprofit groups — to fund a wide range of activities
including building, buying, and rehabilitating affordable housing for rent or homeownership or to provide
direct rental assistance to low-income people. �
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Interlibrary Loan Lending (ILL) Reimbursement Program helps support Texas libraries with partial
reimbursements for direct, out-of-pocket costs associated with participating in statewide resource sharing
such as staff time, postage, courier, and shipping material costs.
National Urban and Urban Search &Rescue Response Systems were established under the authority of the
Federal Emergency Management Agency (FEMA) as a framework for organizing federal, state, and local
partner emergency response teams as an integrated federal disaster response task force.
Sexual Assault Examinations Reimbursements are provided by the Texas Attorney General for the forensic
and medical costs of sexual assault exams through the Crime Victims' Compensation (CVC) Program.
Regional Toll Revenue (RTR) Program expedites regional transportation projects by providing needed
funding to municipalities.
Routine Airport Maintenance Program(RAMP) is an annual grant provided by the State of Texas for"lower-
cost" airside and landside airport improvements.
Selective Traffic Enforcement Program (STEP) Grant reimburses local law enforcement overtime activities
to reduce crashes by focusing enforcement efforts on high-crash areas called Enforcement Zones.
Staffing for Adequate Fire & Emergency Response (SAFER) Grant provides funding directly to fire
departments and volunteer firefighter interest organizations to help them increase the number of trained,
"front line" firefighters available in their communities.
U.S. Marshals Violent Offenders Task Force Program reimburses overtime work hours and other specified
expenditures to provide for a coordinated approach to arrest and prosecute persons with active state and
federal warrants with the United States Marshals Service.
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
What Works Well
Throughout this report, the auditors have reviewed the grants application and management
processes adopted by departments and compared them with the industry's best practices. While
each grant is different and has different execution requirements, this audit broadly reviewed the
following:
• Application &Approvals • Review and Submission of Reimbursement Claims
• Allowability of Expenses • Legal Compliance &Submission of Required Reports
• Subrecipient Monitoring • Matching Requirements
The auditors reviewed selected grants administered by City departments to ensure the existence
of adequate controls and effective compliance with grant conditions. The auditors also reviewed
the Single Audit3 reports issued by external agencies for last three fiscal years and did not find any
qualification in the reports. Grant revenue'received by the selected departments is given below:
Table 1: Departments' Grants Revenue for the Last Three Fiscal Years
Departments 2016-17 2017-18 2018-19 Total
Engineering Services $5,724,090 $20,736,081 $17,932,036 $44,392,207
Fire $1,482,798 $1,675,334 $1,646,674 $4,804,806
Community Development $1,099,592 $1,746,720 $1,210,220 $4,056,532
Police $313,497 $579,444 $509,125 $1,402,066
Facilities $1,086,685 $212,273 $30,835 $1,329,793
Airport $704,175 $49,995 $50,000 $804,170
Solid Waste $582,572 - - $582,572
Library $20,246 $32,149 $35,034 $87,429
Other—Not Reviewed $911,505 $111,876 $20,000 $1,043,381
Total: $11,925,160 $25,143,872 $21,433,924 $58,502,956
Subrecipient Monitoring Activities were Effectively Managed
Government Finance Officers Association (GFOA) best practices recommend establishing a
subrecipient process to provide administrative monitoring including periodical, timely reporting,
and adherence to compliance requirements. Federal regulations5 require monitoring of
subrecipient activities to ensure that the subaward is used for authorized purposes, in compliance
with statutes, regulations, and subaward conditions and is achieving performance goals. Effective
monitoring of subrecipient activities reduces the risk of losing a grant due to non-compliance with
the grant's conditions.
Ten grant subrecipientS6 were selected for testing based on a review of monitoring activities
performed by City departments.The auditors found the following:
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3 All non-federal government agencies and nonprofit organizations that expend$750,000 or more in federal awards in a given fiscal year are
required to obtain a Single Audit(also referred to as an independent financial audit)—Uniform Guidance(2 CFR§200).
'Source:SEFA(Schedule of Expenditures of Federal Awards)for fiscal years 2016-17,2017-18&2018-19.
5 Subrecipient Monitoring and Management Regulations—§200.330 Subrecipient and Contractor Determinations.
6 Community Development Department(9 subrecipients)&Police Department(1 subrecipient).
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
• Subrecipient activities are monitored through a well-defined process or service agreement that
contains guidelines for subrecipients to apply and administer the grant including terms of
application, obligations, responsibilities, expenses, reimbursements, and monitoring in line
with the grant's terms and conditions.
• Services agreements have been executed between the respective department and
subrecipients with City Council approval.
• Subrecipient activities and expenses are monitored by the program manager or assigned staff
periodically per the provisions of the subrecipient monitoring process. Site monitoring is also
conducted by assigned staff when required by the grant's terms and conditions.
o Monitoring of subrecipient activities and expenses is done through a monthly or
quarterly reporting system. The subrecipient submits a detailed report to the
concerned department with the details of the activities completed under the grant
against the key required activities.
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Opportunities for Improvement
The City's application and grant management processes are decentralized. In addition, City
departments had minimal guidance from the City's administration regarding the application and
management of grants between Fiscal Years 2016-17 and 2018-19. Internal controls and
procedures followed by City departments vary depending on the department practices and grant
conditions. An effective internal control framework consists of practices and procedures that
provide reasonable assurance regarding efficiency and effectiveness of operations, reliable
financial reporting, and compliance with laws, regulations, and policies.
Due to the size of their grant programs, recommendations have been made to the Engineering
Services, Fire, Community Development, and Police Departments as well as the Finance
Department. In addition, we reviewed five grants from the following departments: Facilities
Services, Airport, Solid Waste, and Library Services.These departments receive a small number of
grants in comparison and may or may not receive grants revenues annually depending on available
opportunities. Specific findings for these grants are detailed in Appendix C.
GFOA Best Practices
The Government Finance Officers Association (GFOA) recommends that governments create both
a grant policy and a grant administrative oversight committee for approval of grants to ensure
effective administration of the grant's activities.The Grant Policy should:
➢ Outline the steps taken for the identification and application of grants;
➢ Include a requirement that the staff obtain a detailed understanding of grant terms and
conditions; and
➢ Specify how the grant will be monitored.
The GFOA recommends that the Grant Oversight Committee be both interdisciplinary and
permanent and comprise at minimum of: the chief financial officer (CFO); budget manager;
assistant municipal manager, or equivalent; internal auditor,or equivalent;grants administrator or
coordinator; and at least one department head.
The GFOA also recommends that governments create formal processes to encourage compliance
with grant conditions and requirements in a consistent manner. Grants typically come with
significant requirements, and compliance with grant conditions is crucial to receive continuous
support from the grantors. The GFOA recommends that these processes should include
requirements such as monitoring grants' terms and conditions, training requirements, internal
controls, a communication process, record keeping, reporting requirements, and a sub-recipient
monitoring process to have an appropriate grant management framework.
The most widely recognized source of guidance on internal controls is the Committee of Sponsoring
Organizations (COSO), which updated its classic Internal Control-Integrated Framework in 2013.
The GFOA recommended internal control best practices for grants based on COSO's five essential
components of a comprehensive framework of internal control, which has been consolidated by C)
the auditors into a chart(Appendix B).
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
What We Found
• The City does not have a centralized standardized process for identification, application, and
administration of grants by the City departments.The City's grants functions and activities are
administered independently by each department applying for the grant. There is not an
established requirement for obtaining City Council's or any other committee's approval when
applying for grants.
o The Accounting Division is currently in the process of implementing a centralized grant
policy for City departments.
• The City departments covered under the scope of this audit,except Community Development,
do not have formally implemented policies or processes for the application and administration
of grants, including internal controls over compliance with grant conditions.
o Each grant is administered and managed by the respective department based on the
conditions and compliance requirements of the respective grant agreement or
memorandum of understanding.'
• Neither the City nor the departments have formally established any training requirements for
staff administering grants.
• A few departments do not have a centralized database or an adequate record-keeping system
because grant activities are decentralized in the department itself. In some cases,grant records
were not adequately maintained, and necessary documentation could not be located.
Why It Matters
Although the City has successfully received large amounts of grant funding every year, there are
currently no established requirements for identifying and properly assessing grants before
application. There may be potentially missed opportunities for available grant funding without a
formal process or policy. The GFOA best practices recommend that the City's grant applications
should be consistent with City's mission, strategic directions, and objectives rather than merely
supplemental funding for departments. If not consistent, there is a risk that the City's valuable
resources may be wasted.
Firstly, establishing a city-wide grants management policy would enable City departments to
explore, identify, and assess grants that are consistent with the City's mission and strategic plans.
An established, city-wide policy or process would improve the control framework for grants
administration and would provide clear guidance to staff on how to administer grants effectively.
Requiring departments to establish a project plan or grant program for each grant would
strengthen the control over grant administration activities and reduce the risk of non-compliance
with grant conditions. These plans should define the steps and parties responsible for each grant
along with associated timelines.
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7 A memorandum of understanding is an agreement between parties that expresses a convergence of will and indicates an intended common
line of action.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Secondly, establishing a centralized grant oversight committee to review grant requirements,
multi-year benefits, and cost-benefit analyses before applying would avoid the risk of unexpectedly
spending the City's funds to support a grant. Moreover, requiring City Council approval before
applying for grants would bring consistency and provide greater assurance that funds are spent in
accordance with the City's mission and strategic plans.
Thirdly, understanding and executing a grant's requirements efficiently is essential to grant
administration. Grants generally involve varied, complex requirements and need expertise for
administration. Attending grant administration training would help increase the skills and
knowledge base of staff involved in the administration of grants.
Finally, a centralized database of City-wide grants would help coordination among different
departments when identifying and applying for grants. Centrally maintaining a city-wide grants
database would also bring consistency in record keeping and would help in effective reporting.
Recommendation:
1. Incorporate the following best practices in the proposed grant policy:
a. Standardize the process for identification and application of potential grants
including requiring of City Council to approve grant applications.
b. Require departments to create a project plan or grant program with timelines and
parties responsible for implementing the steps of the plan for each grant.
c. Create a Grant Oversight Committee to review and approve grants based on grant
requirements, multi-year benefits, and cost-benefit analysis.
d. Require City departments' staff to identify and attend applicable grant training
opportunities when available.
e. Establish a central database of grants data and documentation and require
departments' Grant Administrators to share grant data documentation to this
database.
Finance Department Comments:
Recommendation 1a., 1b. & 1c.
The Finance Department identified grant administration as an opportunity for improvement in
2019. An administrative directive for grants was drafted and shared with internal audit. The
document was submitted to the Legal Department for review on January 24, 2020. Finance
also contacted the Policy Review Committee and asked for their review when the document is
approved by Legal. The items identified in section 1a, 1b, and 1c, are all included in the
administrative directive.
Recommendation 1d.
Since all grants are different, most agencies offer their own training resources specific to the
grants they provide. This training gives direction on the requirements for grant administration
and reporting. The Finance Department is registered with several entities that provide grant
training. We will communicate those opportunities to the departments when classes are N
available. The Finance Department will also provide training when rolling out the
administrative directive to employees. This training will communicate concepts and
expectations for those that work with grant programs for the City.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Recommendation 1e.
The grant administrative directive as written includes a tracking spreadsheet identifying the
name of the grant, person responsible, and other relevant information for reporting. As the
process continues to evolve, including comments and best practices from this review, Finance
will work to develop a reporting tool like that used for Capital Project Reporting.
Engineering Services Grants
The City applies for Regional Toll Revenue(RTR)funding programs through the North Central Texas
Council of Government (NCTCOG) and administered by TxDOT. Funds are received in advance for
eligible projects, but revenues are deferred until the relevant expenses are incurred. The auditors
selected the following funding programs for review.
Table 2: List of Selected Engineering Services Funding Programs
Grant Grant Period Awarded Amount
RTR-Mayhill Road-From IH35 East to US 380 2 -19 $27,951,115
RTR-Bonnie Brae Road-From IH35 East to US -19 $10,807,950
RTR-ITS Communication Trunk Lines 2016-17&2017-18 $213,077
RTR-McKinney Street(Formerly FM 426) 2016-17&2017-18 $1,336,447
$40,308,589
Most active construction project expenses were examined during Internal Audit's"Capital Projects
Administration" audit series, which was published in May of 2020. Moreover, an outside audit of
the City's funding projects with NCTCOG is ongoing.Therefore,only a limited review of Engineering
Services'funding programs was performed to avoid duplication of efforts.
What We Found
• Based on the review of available documents and information, it was observed that the
Engineering Department generally follows adequate grant management processes, however,
there is no documented grant management procedure or policy. In addition, funding
agreements have been entered into with the Texas Department of Transportation (TxDOT)
with City Council's approval.
• A Standard Operating Procedure is in place to request funding for projects or expenses and to
request budget transfers by Project Managers. Engineering Service has a tracking procedure in
place to monitorthe matching requirements for projects. Matching requirements are observed
by the assigned Project Manager and Deputy Director of Capital Projects in collaboration with
Accounting.
• Assigned Project Managers, in association with other involved staff, ensure the compliance of
applicable laws.
o Environmental review and public involvement requirements under state and federal
laws as required under each respective funding agreement have been followed.
m
o As per the funding agreements requirements, the City is required to file monthly
expense reports to NCTCOG. Engineering staff stated that due to personnel changes,
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
these reports have not been filed for several years. This appears to be due in part to
NCTCOG's Revenue and Project Tracking System being offline. In 2019,the Engineering
Department requested assistance from Accounting to submit these reports.
■ As per information received from the Assistant Controller,the City has reached
a consensus with NCTCOG and Denton County officials to account for all the
previous reports and develop a process for future reporting on all projects.
Why It Matters
In the absence of a formal city-wide or department-level policy for the application and
administration of grants, the assigned staff does not receive adequate guidance to effectively
administer grant activities. The City receives millions of dollars in state funding annually for its
different construction projects, which are managed by the Engineering Services Department. If a
funding program's specific requirements and conditions are not met,the City risks having to return
some or all of the received funds.
Establishing controls over grant administration through a codified process would ensure efficient
and effective grant administration by the assigned staff and would also reduce the likelihood of
unintentional errors and fraud. Furthermore, checks and balances over compliance with grant
conditions and applicable laws would boost the confidence of the grantor and would reduce the
risk that the grantor may discontinue funding.
Finally, adopting a formal process for sharing and maintaining a centralized control matrix and
database would improve reporting and ensure adherence to grant conditions. In addition, this
database could be used as a reference to help staff manage future projects effectively.
Recommendations:
2. Establish a specific program manual for each funding program that identifies and lists the
program's specific requirements and compliance conditions.The grant program manual should
establish procedures and define responsibilities for the approval of program expenses,
execution of activities and reimbursements, and compliance with applicable laws.This manual
should also formally require program reimbursement claims to be reviewed by the Grant
Accountant before submission with the grantor.
Engineering Services Comments:Capital Projects is working with Finance to establish a written
procedure manual for requesting funding, how these funds will be managed and the reporting
requirements of each funding sources.All facets of the project life cycle will be covered from the
initial discussion to final closeout and audit.
3. Codify a formal process for sharing grants data and documentation in real-time with the
Department's Grant Administrator to provide a centralized database of grants.
Engineering Services Comments:Capital Projects is working with Finance as they automate the
grant reporting and modification processes. This will allow all staff to have a current status as
well as review any and all status updates on each grant. Capital Projects staff is expecting
automation to begin in July and continue through the end of the calendar year. qzt
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Fire Grants
The auditors selected nine sample grants for review based on the grant's revenue received by the
Fire Department during the last three fiscal years.
Table 3: List of Selected Fire Department Grants
Grant Grant Period Awarded Amount
Ambulance Services Uncompensated Care Cost 2017-18 $805,058
Ambulance Services Uncompensated Care Cost 2018-19 $511,100
Staffing for Adequate Fire& Emergency Response(SAFER) Grant 2018-19 $510,687
National Urban Search & Rescue Response System 2016-17 $245,256
Urban Search & Rescue Response System (TEEX) 2018-19 $193,560
2016 DFWA-UASI State Homeland Security Program 2017-18 $130,000
National Urban Search & Rescue Response System (TEEX) 2018-19 $121,811
Emergency Management Performance Grant 2018-19 $40,009
2015 DFWA-UASI State Homeland Security Program 2016-17 $2,352
$2,559,833
What We Found
• Grant activities are decentralized within the Fire Department and there is no formal,
department-wide grant policy or procedure in place for the application and administration of
grants.The Fire Chief explores and identifies grant opportunities for the department.
o The Fire Chief designates a supervisory level fire officer as a program manager to apply
for and administer the identified grant. This program manager is responsible for
complying with all conditions of the grant program or agreement.
o The Fire Department does not require City Council approval for grant applications.
• Grant administration and management activities have improved over time and the Fire
Administration Manager is making efforts to streamline grant and funding program
administration activities; however, additional work is needed for effective administration.8
o Of those reviewed, two grants and funding programs did not have an executed
memorandum of understanding or agreement.
o The Fire Department has developed adequate controls over grants, but funding
programs are not properly documented and administered through a well-defined
process or manual.
o There was little evidence that the Grant Accountant approved or monitored funding
program reimbursement packages. Processes should be formalized to ensure the
adequate administration of funding program expenditures and reimbursements.
• Grant records are maintained by the respective program manager and centrally shared with
the Fire Administration Manager. U-)
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o A centralized list of grants applied for and approved by the Fire Department has not 0
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been maintained. CL
8 Specific findings for each Fire grant are detailed in Appendix D.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
o In a few cases, the Fire Administration Manager did not have complete grant
documentation.
Why It Matters
In the absence of a formal city-wide or department-level policy for the application and
administration of grants, the assigned staff does not receive adequate guidance to effectively
administer grant activities. The Fire Department receives millions of dollars in funding under
different programs and grants every year. If the program's specific conditions are not met,the City
risks having to return some or all of the received funds.
A centralized departmental policy or process for approving grants would guide Fire staff and ensure
grants align with the City's objectives. Without a memorandum of understanding or funding
agreement governing the conditions of the grant or funding program, it is not possible to verify
compliance with grant agreement conditions or the effectiveness of processes over grant activities.
Similarly, establishing controls over grant administration through a codified process would ensure
efficient and effective grant administration by the assigned staff and would also reduce the
likelihood of unintentional errors and fraud. Furthermore, checks and balances over compliance
with grant conditions and applicable laws would boost the confidence of the grantor and would
reduce the risk that the grantor may discontinue funding.
Finally, adopting a formal process for sharing and maintaining a centralized control matrix and
database would improve reporting and ensure adherence to grant conditions. This database
could be used as a reference to help staff manage future projects effectively.
Recommendations:
4. Formalize the process and authority for approving grants and entering into a memorandum of
understanding or agreement for each grant or funding program to ensure grant conditions are
documented.
Fire Department Comments: The Fire Department is currently in the process of assessing all
grants and funding programs for original understandings and agreements, as well as
developing a formal policy for grant authority and approval.
5. Establish a specific program manual for each funding program that identifies and lists the
program's specific requirements and compliance conditions.The grant program manual should
establish procedures and define responsibilities for the approval of program expenses,
execution of activities and reimbursements, and compliance with applicable laws.This manual
should also formally require program reimbursement claims to be reviewed by the Grant
Accountant before submission with the grantor.
Fire Department Comments: The Fire Department is in the process of identifying an internal and
external expert for each grant and funding program. Once the experts have been identified, the
Fire Administration Manager will work with them to create program manuals.
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Audit of Grants Management
6. Codify a formal process for sharing grants data and documentation in real-time with the
Department's Grant Administrator (i.e. the Fire Administration Manager) to provide a
centralized database of grants.
Fire Department Comments: The Fire Administration Manager will create a grant database
along with a shared spreadsheet for all grant program managers to input information during
each grant process. A formal process will be written and will include expectations for sharing
grants data.
Community Development Grants
The Community Development Department receives various types of grants every year and offers
various programs that benefit the community. The following selected grants were reviewed to
verify the adequacy of internal controls and appropriateness of grants management activities:
Table 4: List of Selected Community Development Department Grants
Grant Grant Period Awarded Amount
Community Development Block Grant(CDBG) 2018-19 $763,211
Emergency Solutions Grant 2017-19 $600,000
HOME Investment Partnership Grant 2018-19 $405,422
$1,768,633
What We Found
• For all three selected grants, Community Development has adequate grant program manuals
and policies in place to effectively administer grants and ensure compliance with grant
conditions.
• The selected grants were duly approved via ordinance by the City Council. Grant agreements
were executed with the grantors with the authority of City Council.Action plans were prepared
by staff and were evaluated and approved by City Council wherever required.
• The Community Development Department has constituted two advisory committees9 to
administer and monitor the CDBG and HOME programs established under the grants.
o These committees provide CDBG and HOME recommendations to City Council on
funding requests by social services organizations and non-social services organizations.
o Community Development staff serve in an administrative and advisory capacity to
these committees.
• Community Development grants are generally managed and administered effectively and
efficiently through well-defined policies and manuals. However,the adopted grant manual
and policies do not set a formal process for communication with the Grant Accountant or
require a review of grants documentation by the Grant Accountant.
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o The grant expenses are prepared by the Community Development Administrative v
Assistant and approved by the Community Service Manager. The expenses are a
9 These are the Community Development Advisory Committee and the Human Services Advisory Committee.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
reconciled with reimbursements by the Grant Accountant whenever any
reimbursements or drawdowns are forwarded to the Grant Accountant for review.
o The reimbursements are prepared by staff and reviewed by the Grant Accountant
periodically to check the accuracy and correctness. All expenses, reimbursement, and
program incomes are reviewed and reconciled by the staff and the Grant Accountant
at the end of the program.
• The terms and conditions of the grant agreements were complied with regarding the
reimbursement of claims and submission of required reports.
o Based on the review of available records, Community Development complied with all
applicable laws and reporting requirements stipulated under the respective grants'
agreements.
• Community Development staff have attended various grant training during the period under
review as per the recognized needs of the staff.
Why It Matters
Setting formal requirements for periodic communication with the Grant Accountant and provisions
for sending grants reimbursements before submission to the grantor would provide clear direction
to present and future staff to ensure effective control and claim reporting. Additionally, an
established process would reduce the risk that reimbursements are rejected by the grantor due to
discrepancies or inaccuracy in reimbursement claims.
Recommendation:
7. Codify a process to periodically communicate with the Grant Accountant for review of
expenses and reimbursements.
Community Development Comments: Community Development Staff already had a process to
periodically communicate with the Grant Accountant for review of expenses and
reimbursements through the reconciliation process. Since meeting with the auditor, CD
implemented a process improvement that instead of just a notification of the HUD draws to
now include an additional step involving submitting the financial drawdown worksheet to the
Grants Accountant after the draw is entered in IDIS for Grants Accountant review and approval.
After the Grants Accountant's approval, the draw worksheet is provided to Community Services
Manager to approve draw in IDIS requesting the funds from HUD.
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Audit of Grants Management
Police Grants
The Police Department received a total of twenty-three grants or reimbursement revenues during
the last three fiscal years. Of these, eight grants were selected for review. This judgment sample
represents more than 60% of the total grant revenue received by the Police Department during
the last three fiscal years. These grants were awarded for different law enforcement and public
safety objectives and are described in Table 5:
Table 5: List of Selected Police Department Grants
Grant Grant Period Awarded Amount
Domestic and Sexual Violence Initiative Grant 2018-19 $240,706
Domestic and Sexual Violence Initiative Grant 2017-18 $204,202
Chapter 59 Asset Forfeiture Award 2017-18 $147,894
Chapter 59 Asset Forfeiture Award 2016-17 $119,103
STEP Comprehensive Grant 2016-17 $69,397
Reimbursement for Sexual Assault Examinations 2018-19 $54,140
U.S. Marshals Violent Offenders Task Force 2018-19 $30,560
$866,002
What We Found
• The Police Department does not have a centralized, formal grant policy or procedure in place
for the application and management of grants. Grants are applied and administered by the
Police Department as needed. The Police Chief is involved in strengthening relationships with
federal agencies to explore grant opportunities for the department.
o A supervisory level sergeant from the division benefiting from the grant is assigned as
the primary point of contact. They perform all functions and are responsible for
complying with all conditions of the grant program and agreement.
• Grants are not always approved by the City Council and a memorandum of understanding or
agreement was not always executed.10
o The STEP grant and U.S. Marshals Violent Offenders Task Force Program were applied
for and approved without City Council authority.
■ For U.S. Marshals U.S Marshals Violent Offenders Task Force Program, a
memorandum of understanding was not executed for FY 2018-19; however, one
was executed in 2012.
• Grant activities are decentralized within the Police Department. Efforts are being made by staff
to improve grant administration activities, but formal processes are still needed to improve
check and balances over compliance with laws, allowability of grant expenses and
reimbursement claims, and to define the role of the Grant Accountant.
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
• Grants documentation is created and executed by the sergeant or assigned police officer as
per the respective grant's conditions and centrally shared with the Assistant Director of Police
—Finance and Administration.
o A centralized list of grants applied for and approved by the Police Department has not
been maintained.
o In a few cases, the Assistant Director of Police — Finance and Administration did not
have access to complete grant documentation. Separately obtaining these documents
from the concerned sergeant or police officer was a burdensome process.
Why It Matters
In the absence of a formal city-wide or department-level policy for the application and
administration of grants, the assigned staff does not receive adequate guidance to effectively
administer grant activities. The Assistant Director of Police — Finance & Administration (i.e. the
Police Department's Grant Administrator) is making efforts to streamline and improve grant
activities, but formally adopted policies and procedures are still needed for grant approvals,
compliance with laws, reimbursement of grant expenses, and communication and coordination
with the Grant Accountant.
Good controls over grant administration through a codified process would ensure efficient and
effective grant administration by the assigned staff and would also reduce the likelihood of
unintentional errors and fraud. Furthermore, checks and balances over compliance with grant
conditions and applicable laws would boost the confidence of the grantor and would reduce the
risk that the grantor may discontinue funding.
Additionally, in the current grants database management system, obtaining historical grant data
for verification seems to be a challenge due to the absence of formalized processes and policies
and decentralized maintenance of records in the past. As per the Police staff, grant records are
maintained by the respective sergeant or authorized officer and are centrally shared with the
Assistant Director of Police— Finance &Administration. Adopting a formal process for sharing and
maintaining a centralized control matrix and database would improve reporting and ensure
adherence to grant conditions. In addition,this database could be used as a reference to help staff
manage future projects effectively.
Recommendations:
8. Formalize the process and authority for approving grants and entering into a memorandum of
understanding or agreement for each grant or funding program to ensure grant conditions are
documented.
Police Department Comments:The Administrative Services Bureau conducted a formal training
for all supervisory personnel regarding the authority for approving grants and entering into a
memorandum of understanding or agreement for each grant or funding program to ensure
grant conditions are documented.
9. Establish procedures and define responsibilities for the approval of grant expenses, execution 0
of grant activities and reimbursements,and compliance with applicable laws.This policy should N
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
also formally require grant reimbursement claims to be reviewed by the Grant Accountant
before submission with the grantor.
Police Department Comments: These procedures will be reflected in the department's updated
policy manual.
10. Codify a formal process for sharing grants data and documentation in real-time with the
Department's Grant Administrator (i.e. the Assistant Director of Police — Finance &
Administration) to provide a centralized database of grants.
Police Department Comments: The Administrative Services Bureau has created a shared
electronic repository for all grants and reimbursements located on the department's shared
drive which provides direct access for the Assistant Director of Police Finance&Administration,
Bureau Commander and Grant Accountant.
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Appendix A: Management Response Summary
The following summarizes the recommendations issued throughout this report. The auditors found that
staff and the Department were receptive and willing to make improvements to controls where needed.
Management has provided their response to each recommendation.
Incorporate the following best practices in the Expected Completion:
proposed grant policy: Recommendation 1a.,
a. Standardize the process for identification and 1b.,1c.&1e. -Fall 2020
application of potential grants including
requiring of City Council to approve grant Recommendation 1d. -
applications. Completed
b. Require departments to create a project plan
or grant program with timelines and parties
responsible for implementing the steps of the
plan for each grant.
1 c. Create a Grant Oversight Committee to review Concur
and approve grants based on grant
requirements, multi-year benefits, and cost-
benefit analysis.
d. Require City departments'staff to identify and
attend applicable grant training opportunities
when available
e. Establish a central database of grants data
and documentation and require departments'
Grant Administrators to share grant data
documentation to this database.
Finance Department Comments: Responsibility:
Assistant Controller
Recommendation 1a., 1b. & 1c. (Accounting)
The Finance Department identified grant administration as an opportunity for
improvement in 2019. An administrative directive for grants was drafted and
shared with internal audit. The document was submitted to the Legal
Department for review on January 24, 2020. Finance also contacted the Policy
Review Committee and asked for their review when the document is approved
by Legal. The items identified in section 1a, 1b, and 1c, are all included in the
administrative directive.
Recommendation 1d.
Since all grants are different, most agencies offer their own training resources
specific to the grants they provide. This training gives direction on the
requirements for grant administration and reporting. The Finance Department
is registered with several entities that provide grant training. We will
communicate those opportunities to the departments when classes are
available. The Finance Department will also provide training when rolling out
the administrative directive to employees. This training will communicate N
concepts and expectations for those that work with grant programs for the City. N
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Recommendation le.
The grant administrative directive as written includes a tracking spreadsheet
identifying the name of the grant, person responsible, and other relevant
information for reporting. As the process continues to evolve, including
comments and best practices from this review, Finance will work to develop a
reporting tool like that used for Capital Project Reporting.
Establish a specific program manual for each funding Expected Completion:
program that identifies and lists the program's specific December 2020
requirements and compliance conditions. The grant
program manual should establish procedures and
2 define responsibilities for the approval of program Concur
expenses, execution of activities and reimbursements,
and compliance with applicable laws. This manual
should also formally require program reimbursement
claims to be reviewed by the Grant Accountant before
submission with the grantor.
Engineering Services Comments: Capital Projects is working with Finance to Responsibility:
establish a written procedure manual for requesting funding, how these funds Dir Cap. Projects/City
will be managed and the reporting requirements of each funding sources. All Engineer/Assistant
facets of the project life cycle will be covered from the initial discussion to final Director of Finance,
closeout and audit. Engineering/Assistant
Controller
(Accounting)/Deputy
City Engineer
Codify a formal process for sharing grants data and Expected Completion:
documentation in real-time with the Department's December 2020
3 Grant Administrator to provide a centralized database Concur
of grants.
Engineering Services Comments: Capital Projects is working with Finance as Responsibility:
they automate the grant reporting and modification processes. This will allow Dir Cap. Projects/City
all staff to have a current status as well as review any and all status updates on Engineer/Assistant
each grant. Capital Projects staff is expecting automation to begin in July and Director of Finance,
continue through the end of the calendar year. Engineering/Assistant
Controller
(Accounting)/Deputy
City Engineer
Formalize the process and authority for approving Expected Completion:
4 grants and entering into a memorandum of Concur December 2020
understanding or agreement for each grant or funding
program to ensure grant conditions are documented.
Fire Department Comments: The Fire Department is currently in the process Responsibility:
of assessing all grants and funding programs for original understandings and Fire Chief/
agreements, as well as developing a formal policy for grant authority and Fire Administration
approval. Manager
Establish a specific program manual for each funding Expected Completion: rn
5 program that identifies and lists the program's specific Concur December 2020UO
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requirements and compliance conditions. The grant
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
program manual should establish procedures and
define responsibilities for the approval of program
expenses, execution of activities and reimbursements,
and compliance with applicable laws. This manual
should also formally require program reimbursement
claims to be reviewed by the Grant Accountant before
submission with the grantor.
Fire Department Comments: The Fire Department is in the process of Responsibility:
identifying an internal and external expert for each grant and funding program. Fire Chief/
Once the experts have been identified, the Fire Administration Manager will Fire Administration
work with them to create program manuals. Manager
Codify a formal process for sharing grants data and Expected Completion:
documentation in real-time with the Department's December 2020
6 Grant Administrator (i.e. the Fire Administration Concur
Manager) to provide a centralized database of grants.
Fire Department Comments: The Fire Administration Manager will create a Responsibility:
grant database along with a shared spreadsheet for all grant program Fire Administration
managers to input information during each grant process.A formal process will Manager/
be written and will include expectations for sharing grants data. Fire Chief
Codify a process to periodically communicate with the Expected Completion:
7 Grant Accountant for review of expenses and Concur Completed
reimbursements.
Community Development Department Comments: Community Development Responsibility:
Staff already had a process to periodically communicate with the Grant Community Services
Accountant for review of expenses and reimbursements through the Manager
reconciliation process. Since meeting with the auditor, CD implemented a
process improvement that instead of just a notification of the HUD draws to
now include an additional step involving submitting the financial drawdown
worksheet to the Grants Accountant after the draw is entered in IDIS for Grants
Accountant review and approval. After the Grants Accountant's approval, the
draw worksheet is provided to Community Services Manager to approve draw
in IDIS requesting the funds from HUD.
Formalize the process and authority for approving Expected Completion:
8 grants and entering into a memorandum of Concur Completed
understanding or agreement for each grant or funding
program to ensure grant conditions are documented.
Police Department Comments:The Administrative Services Bureau conducted Responsibility:
a formal training for all supervisory personnel regarding the authority for Assistant Director-Police
approving grants and entering into a memorandum of understanding or Finance/Admin
agreement for each grant or funding program to ensure grant conditions are
documented.
Establish procedures and define responsibilities for the Expected Completion:
approval of grant expenses, execution of grant December 2020
9 activities and reimbursements, and compliance with Concur
applicable laws. This policy should also formally require N
grant reimbursement claims to be reviewed by the v
Grant Accountant before submission with the grantor.
The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Police Department Comments: These procedures will be reflected in the Responsibility:
department's updated policy manual. Assistant Director-Police
Finance/Admin.and
Accreditation/Compliance
Codify a formal process for sharing grants data and Expected Completion:
documentation in real-time with the Department's Completed
10 Grant Administrator(i.e. the Assistant Director of Police Concur
— Finance & Administration) to provide a centralized
database of grants.
Police Department Comments: The Administrative Services Bureau has Responsibility:
created a shared electronic repository for all grants and reimbursements Assistant Director-Police
located on the department's shared drive which provides direct access for the Finance/Admin.
Assistant Director of Police Finance &Administration, Bureau Commander and
Grant Accountant.
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Appendix B: GFOA Recommended — COSO Internal Control Framework
GFOXS COSO INTERNAL CONTROL FRAMEWORK FOR GRANTS
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• Make entity-wide policy decisions to ensure consistency
• Competent Staff
Control • Staff to hold accountable and responsibility
Environment • Cross functional team support for entity-wide grants
management
• Risk assessment of grants management processes
• Use of Internal Control questionnaire for risk analysis
Risk Assessment • Consider the level of program risk viz. high, medium or low
• Perform risk-benefit analysis
• Consider likelihood of fraud
i
• Develop and update grant policies and procedures
• Use financial management systems
Control Activities • Adherence to applicable laws and regulations
• Establish control activities to ensure reliability of information
Update list of vendors using debarment list(state&federal)
i
• Document the purpose and grants'obligations
• Keep proper record of grants with classification
Information . Make available grants information to all stakeholders/vendors
Communication . Develop ongoing communication with finance staff and
auditors for grant reporting and compliance J
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• Develop a control process to provide periodic assurance for
compliance of applicable laws
Monitoring • Annual review of risk management process
• Communication of program deficiencies to all concerned
• Ensure taking timely corrective actions for deficiencies
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Appendix C: Management Letter to Other Departments
MEMORANDUM
DATE: June 3, 2020
TO: Scott Gray, Director of Airport, Capital Planning, Facilities
Brian Boerner, Director of Solid Waste
Jennifer Bekker, Director of Libraries
FROM: Internal Audit Department
SUBJECT: Internal Audit of Grants Management—Other Departments
The Internal Audit Department has completed an audit of Grants Management. As part of this
audit, we reviewed five grants or funding programs as shown in the table below:
Table 1: List of Selected Other Department Grants
Department Grant Grant Period Awarded Amount
Facilities Evers Park Bridge&Trail Grant 2016-19 $1,329,793
Solid Waste Low Speed Shredder Grant 2016-17 $150,000
Solid Waste High Speed Grinder Grant 2016-17 $131,694
Airport Routine Airport Maintenance Program 2018-19 $50,000
Library Interlibrary Loan Program 2018-19 $33,552
This letter is intended to provide you with information regarding our specific findings related to
each grant that was reviewed. Recommendations have been made to the Finance Department for a
city-wide grants management policy that should address the issues noted below.
Facilities: Evers Park Bridge & Trail Grant
An interlocal funding agreement was executed by the City of Denton with TxDOT and an
ordinance was passed by City Council. Reimbursement packages were duly filled and fully
reimbursed. Matching requirements of 20% were duly tracked while submitting the
reimbursements.
Solid Waste: High Speed Grinder & Low Speed Shredder Grant
City council approved and passed resolutions to apply and accept the grinder and shredder grants
and grant agreements were duly entered. Expenses were incurred for the purchase of equipment in
compliance with grant agreement conditions. Quarterly reports were duly submitted on time with
NCTCOG along with reimbursement documents.
The reimbursement claims were reviewed by the Grant Account and all reimbursements were duly
paid by NCTCOG. Matching expenses of$940,000 were incurred by the City for purchasing the
equipment in compliance with the terms of the grant agreement. Cz
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Airport: Routine Airport Maintenance Program (RAMP)
The grant was duly approved by the City Council by passing a resolution and a grant agreement
was duly entered. The terms and conditions of the grant were duly complied with.
Library: Interlibrary Loan Program
The grant application is completed each year and signed by City Manager; however, the City
Council does not approve this grant. The terms and conditions of the grant are duly complied with
by the library staff.
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Appendix D: Management Letter to the Fire Department
MEMORANDUM
DATE: June 3, 2020
TO: Kenneth Hedges, Fire Chief
FROM: Internal Audit Department
SUBJECT: Internal Audit of Grants Management—Fire Grants
The Internal Audit Department has completed an audit of Grants Management. As part of this
audit, we reviewed nine grants or funding programs as shown in the table below:
Table 1: List of Selected Grants of the Fire Department
Grant Grant Period Awarded Amount
Ambulance Services Uncompensated Care Cost Program 2017-18 $805,058
Ambulance Services Uncompensated Care Cost Program 2018-19 $511,100
Staffing for Adequate Fire&Emergency Response(SAFER) Grant 2018-19 $510,687
National Urban Search&Rescue Response System 2016-17 $245,256
Urban Search&Rescue Response System 2018-19 $193,560
National Urban Search&Rescue Response System 2018-19 $121,811
2015 DFWA-UASI State Homeland Security Program 2016-17 $2,352
2016 DFWA-UASI State Homeland Security Program 2017-18 $130,000
Emergency Management Performance Grant 2018-19 $40,009
$2,559,833
This letter provides you with information regarding our specific findings related to each reviewed
grant. The full report includes associated recommendations and your management responses.
Ambulance Services Uncompensated Care Cost Program
There was no evidence that the City Council had approved participation in this program.
The Fire Department does not have a formal set of policies or procedures to administer this
program. In the absence of policy and procedures, the adequacy of controls over reimbursement
of claims could not be verified. Fund allocation and cost reporting is completed periodically per
the terms of the program.
Staffing for Adequate Fire & Emergency Response (SAFER) Grant
A letter of understanding was executed by the City Manager with Federal Emergency Management
FEMA; however, the City Council did not approve the application or acceptance of this grant.
Semi-annual reports and quarterly reports were properly filed with the grantor. Reimbursement
documentation was properly submitted per the terms of the grant and was reviewed by the Grant
Accountant before submission. Matching requirements are adequately tracked. The Fire N
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The City of Denton Internal Audit Report June 2020
Audit of Grants Management
Department complied with the terms and conditions of the SAFER grant as per the executed letter
of understanding.
National and State Urban Search & Rescue Response Systems
The City did not enter into a memorandum of understanding (MoU) or an agreement with FEMA
for the administration of this program. There is no record that the City Council approved the City's
participation in the program.
A Program Manual detailed the provisions and procedures for deployment of personnel and
reimbursement of expenses. Documentation for the deployment of personnel and reimbursements
was available but the process followed for deployment and reimbursement claims could not be
verified.
2015 & 2016 DFWA-UASI State Homeland Security Program
The City of Denton used these grants to purchase equipment to prepare the Fire Department for
catastrophic events and risks. The terms and conditions of the grant were compiled by the
department.
The 2016-17 grant was approved by City Council via a resolution; however, the 2017-18 grant
was not approved by City Council. Purchased equipment invoices were duly submitted to the
grantor. Progress reports and other required documents were properly filed with the grantor and
all expenses were reimbursed.
Emergency Management Performance Grant
The grant was approved by the Texas Division of Emergency Management, Texas A&M
University System, with a 100% matching requirement by the City of Denton. The grant was
administered by the Fire Department in coordination with Finance through a well-defined process.
The City Council did not approve the application or acceptance of this grant,though the application
was signed by the Mayor. Quarterly financial reports and performance reports were properly
submitted with the grantor. The terms and conditions of the grant were duly complied with by the
Fire Department.
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Appendix E: Management Letter to the Police Department
MEMORANDUM
DATE: June 3, 2020
TO: Frank Dixon, Chief of Police
FROM: Internal Audit Department
SUBJECT: Internal Audit of Grants Management—Police Grants
CC: Honorable Mayor and City Council Members
The Internal Audit Department has completed an audit of grants management.As part of this audit,
we reviewed eight grants or funding programs as shown in the table below:
Table 1: List of Selected Grants of the Police Department
Grant Grant Period Awarded Amount
Domestic and Sexual Violence Initiative Grant 2017-18 $204,202
Domestic and Sexual Violence Initiative Grant 2018-19 $240,706
Chapter 59 Asset Forfeiture Award 2016-17 $119,103
Chapter 59 Asset Forfeiture Award 2017-18 $147,894
STEP Comprehensive Grant 2016-17 $69,397
Reimbursement for Sexual Assault Examinations 2018-19 $54,140
U.S. Marshals Violent Offenders Task Force 2018-19 $30,560
$866,002
This letter provides you with information regarding our specific findings related to each reviewed
grant. The full report includes associated recommendations and your management responses.
Domestic and Sexual Violence Initiative Grants
The City of Denton was a subrecipient of this grant with the International Association of Chief of
Police(IACP)received from the Department of Justice. The City Council duly approved this grant
and executed an agreement with IACP for the acceptance and administration of the grant.
Activities and subrecipient expenses are monitored through a quarterly reporting system.
The Police Department complied with the grant conditions. The reimbursement claims along with
the required documents were submitted by police officials within the prescribed time and in
compliance with the conditions of the grant agreement. The Police Department properly complied
with applicable laws and regulations (viz. the DUNS Act and System Award Management
regulations). Monthly questions reports were properly submitted with the IACP regularly.
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Based on discussion with Police staff, employees request confirmation from the grantor to ensure
the allowability of expenses for travel grants before traveling. This process was established
because some expenses claims were disallowed by the grantor in the past. Of the ten expenses
samples reviewed, there were nine cases where prior confirmation was not received by staff from
the grantor (IACP) before incurring the expenses (i.e. attending the conference). None of the
reviewed expenses were disallowed by the grantor.
Chapter 59 Asset Forfeiture Awards
An agreement has been executed by the City with the District Attorney's Office for the sharing of
proceeds. The Police Department duly submitted the annual forfeiture reports for 2016-17 and
2017-18 to the State Attorney's Office.
Expenses were incurred in compliance with the provisions of Chapter 59; meaning they were
broadly related to the purchase of equipment, furniture,vehicle maintenance, gas, and other office
supplies. However, no monitoring processes have been established to ensure expenses were
allowed under Chapter 59 provisions.
Selective Traffic Enforcement Program (STEP) Grant
A STEP policy was adopted in 2013 and an agreement was duly entered with the grantor;however,
the City Council did not approve the grant application or acceptance. STEP grant hours are
approved in the TeleStaff system by the officer in charge of the STEP program: however,adequate
documentation was not available to verify the process followed to ensure expenses were allowed
and reimbursement claims were correct.
Reimbursement for Sexual Assault Examinations
Invoices for Sexual Assault Examination of victims are received by the assigned Police staff from
nurses at the medical provider's facility and subsequently reimbursed by the Attorney General. All
expenses were within the limit specified ($1,000) by the Attorney General. Expenses and
reimbursements were properly administered and records for all expenses and reimbursements were
properly maintained. The established process adequately allows for the administration of expenses
and reimbursements.
U.S. Marshals Violent Offenders Task Force Program
City Council approval and a memorandum of understanding (MOU) for the administration of the
2018-19 grant were unavailable. Procedures or guidelines for approving and claiming
reimbursements and monitoring grant activities had not been established.
As per accounting records, the received and expended amount was $30,560; however, the revised
annual obligation document showed that the approved amount was only $21,376. Of the amount
expended, reimbursement records were only available to verify $9,660. There was little evidence
that the reimbursement packet had been reviewed by the Grant Accountant.
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