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DEPARTM ENT OF THE TREASURY
WASHINGTON, D.C. 20220
OFFICE OF
June 27, 2023
INSPECTOR GENERAL
MEMORANDUM FOR JESSICA MILANO, ACTING CHIEF RECOVERY OFFICER,
DEPARTMENT OF THE TREASURY
FROM:
Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT:
Desk Review of New York City’s Use of Coronavirus
Relief Fund Proceeds (OIG-CA-23-021)
Please find the attached desk review memorandum1 on New York City’s use of
Coronavirus Relief Fund (CRF) proceeds. The CRF is authorized under Title VI of
the Social Security Act, as amended by Title V, Division A of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act). Under a contract monitored by
our office, Castro & Company, LLC (Castro), a certified independent public
accounting firm, performed the desk review. Castro performed the desk review in
accordance with the Council of the Inspectors General on Integrity and Efficiency,
Quality Standards for Federal Offices of Inspector General standards of
independence, due professional care, and quality assurance.
In its desk review, Castro personnel found that New York City was not compliant
with the quarterly Financial Progress Reports (FPR) reporting timeline as required
under Department of the Treasury’s (Treasury) guidance for cycles 12, 33, and 44.
In addition, Castro personnel reviewed documentation for a selection of 25
transactions reported in the quarterly reports through cycle 65. Other than timely
reporting and errors reported in the Loans greater than or equal to $50,000 and
Aggregate Reporting less than $50,000 expenditure categories, Castro’s review of
New York City’s quarterly FPR submissions did not identify reporting issues. The
errors in the Loans greater than or equal to $50,000 and Aggregate Reporting less
than $50,000 expenditure categories were corrected in Cycle 86 by New York City
personnel.
1 The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) assigned the Department of
the Treasury Office of Inspector General with responsibility for compliance monitoring and
oversight of the receipt, disbursement, and use of Coronavirus Relief Fund (CRF) payments. The
purpose of the desk review is to perform monitoring procedures of the prime recipient’s receipt,
disbursement, and use of CRF proceeds as reported in the grants portal on a quarterly basis.
2 Calendar quarter ending June 30, 2020.
3 Calendar quarter ending December 31, 2020.
4 Calendar quarter ending March 31, 2021.
5 Calendar quarter ending September 30, 2021.
6 Calendar quarter ending March 31, 2022.
Page 2
Once the corrections were made in Cycle 8 by New York City personnel, Castro
was able to determine that the uses of CRF proceeds for Contracts greater than or
equal to $50,000, Loans greater than or equal to $50,000, Aggregate Reporting for
transactions less than $50,000,7 and Aggregate Payments to Individuals8 complied
with the CARES Act and Treasury’s Guidance. Additionally, Castro determined
that New York City’s risk of unallowable use of funds is low. As such, Castro is not
recommending that Treasury Office of Inspector General (OIG) perform an audit of
New York City’s use of CRF proceeds.
As part of the desk review, Castro tested a $45,000,000 contract, which included a
sub-contract to issue loans and cover related fees for a federal CRF contribution
amount of $6,000,000. The loans tested had maturity dates in 2025 and 2026,
which are beyond the CRF period of performance end date of December 31, 2021.
Therefore, Castro notified OIG about New York City’s potential future loan
repayments so that OIG can coordinate with Treasury management for the
monitoring and return of funds.
In connection with our contract with Castro, we reviewed Castro’s desk review
memorandum and related documentation and inquired of its representatives. Our
review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to
express an opinion on New York City’s use of the CRF proceeds. Castro is
responsible for the attached desk review memorandum and the conclusions
expressed therein. Our review found no instances in which Castro did not comply,
in all material respects, with the Quality Standards for Federal Offices of Inspector
General.
We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Deputy Assistant Inspector General for Audit, at (202) 487-8371.
7 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
grants portal. Transactions less than $50,000 can be reported as an aggregate lump-sum amount
by type (contracts, grants, loans, direct payments, and transfers to other government entities).
8 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the grants portal to prevent inappropriate disclosure of
personally identifiable information.
Page 3
cc:
Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Victoria Collin, Chief Compliance & Finance Officer, Office of Recovery
Programs, Department of the Treasury
Christopher Blanco, Senior Assistant Director, Mayor’s Office, New York
City
Wayne Ference, Partner, Castro & Company, LLC
Castro Company
Auditors ✓
Advisors
1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com
Desk Review of New York City
June 27, 2023
OIG-CA-23-021
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM:
Wayne Ference
Partner, Castro & Company, LLC
SUBJECT:
Desk Review of New York City
On August 10, 2021, we initiated a desk review of New York City’s use of the
Coronavirus Relief Fund (CRF) authorized under Title VI of the Social Security Act,
as amended by Title V Division A of the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act).1 The objective of our desk review was to evaluate New
York City’s documentation supporting its uses of CRF proceeds as reported in the
GrantSolutions2 portal and to assess the risk of unallowable use of funds. The
scope of our desk review was limited to obligation and expenditure data for the
period of March 1, 2020 through September 30, 2021 as reported in Cycles 13
through 64 in the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed New York City’s quarterly Financial Progress Reports (FPRs)
submitted in the GrantSolutions portal through September 30, 2021;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021;5
1 P.L. 116-136 (March 27, 2020).
2 GrantSolutions, a grant and program management Federal shared service provider under the
U.S. Department of Health and Human Services, developed a customized and user-friendly
reporting solution to capture the use of CRF payments from recipients.
3 Calendar quarter ending June 30, 2020.
4 Calendar quarter ending September 30, 2021.
5 Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf
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Desk Review of New York City
3) reviewed Treasury Office of Inspector General (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and Recordkeeping;6
4) reviewed Treasury OIG’s monitoring checklists7 of New York City's quarterly
FPR submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit reports, and those
issued by the Government Accountability Office and other applicable
Federal agency OIGs for internal control or other deficiencies that may pose
risk or impact New York City’s uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations, the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee (PRAC),8 and Treasury OIG Office of Counsel
input on issues that may pose risk or impact New York City’s uses of CRF
proceeds;
7) interviewed key personnel responsible for preparing and certifying New
York City’s GrantSolutions portal quarterly FPR submissions, as well as
officials responsible for obligating and expending CRF proceeds;
8) made a non-statistical selection of contracts, loans, aggregate reporting
data,9 and aggregate payments to individuals10 identified through
GrantSolutions reporting; and
9) evaluated documentation and records used to support New York City’s
quarterly FPRs.
Based on our review of New York City’s documentation supporting the uses of
CRF proceeds as reported in the GrantSolutions portal, we found that the
transactions were adequately supported and the use of CRF proceeds complied
6 Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently Asked
Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021
7 The checklists are used by the Treasury OIG to monitor the progress of prime recipient reporting
in the GrantSolutions portal. GrantSolutions quarterly submission reviews are designed to identify
material omissions and significant errors, and where necessary, include procedures for notifying
prime recipients of misreported data for timely correction. Treasury OIG follows the CRF Prime
Recipient Quarterly GrantSolutions Submissions Monitoring and Review Procedures Guide, OIG
CA-20-029R to monitor the prime recipients quarterly.
8 Section 15010 of P.L. 116-136 established the Pandemic Response Accountability Committee
within the Council of the Inspectors General on Integrity and Efficiency to promote transparency
and conduct and support oversight of covered funds (see Footnote 17 for a definition of covered
funds) and the coronavirus response to (1) prevent and detect fraud, waste, abuse, and
mismanagement; and (2) mitigate major risks that cut across program and agency boundaries.
9 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
GrantSolutions portal. Transactions less than $50,000 can be reported as an aggregate lump-sum
amount by type (contracts, grants, loans, direct payments, and transfers to other government
entities).
10 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.
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Desk Review of New York City
with the CARES Act and Treasury’s Guidance. New York City’s risk of unallowable
use of funds is low. Castro is not recommending Treasury OIG perform an audit of
New York City. However, we notified Treasury OIG about New York City’s loan
repayments so that Treasury OIG can coordinate with Treasury for the monitoring
and return of funds.
Non-Statistical Transaction Selection Methodology
Treasury issued a CRF payment to New York City of $1,454,710,277.70. As of Cycle
6,11 New York City’s cumulative obligations and expenditures were
$942,704,677.88 and $921,904,677.88, respectively. New York City’s cumulative
obligations and expenditures by payment type as reported in GrantSolutions
through Cycle 612 are summarized below:
Payment Type
Cumulative
Cumulative
Obligations
Expenditures
Contracts >= $50,000
$
56,965,538.59
$
56,965,538.59
Grants >= $50,000
$
-
$
-
Loans >= $50,000
$
21,941,500.00
$
1,141,500.00
Transfers >= $50,000
$
-
$
-
Direct Payments >= $50,000
$
-
$
-
Aggregate Reporting < $50,000
$
30,548,827.29
$
30,548,827.29
Aggregate Payments to Individuals (In Any
Amount)
$
833,248,812.00
$
833,248,812.00
Totals
$
942,704,677.88
$
921,904,677.88
Castro made a non-statistical selection of Contracts greater than or equal to
$50,000 and Aggregate Payments to Individuals. Selections were made using
auditor judgment based on information and risks identified in reviewing audit
reports, the GrantSolutions portal reporting anomalies13 identified by the Treasury
OIG CRF monitoring team, and review of New York City’s FPR submissions. Castro
noted that New York City did not obligate or expend CRF proceeds for Grants
greater than or equal to $50,000, Transfers greater than or equal to $50,000,14 and
Direct Payments greater than or equal to $50,000, and made reclassification
correcting entries in a subsequent cycle for Loans greater than or equal to $50,000
and Aggregate Reporting less than $50,000. Therefore, we did not make a
selection from these categories.
11 Calendar quarter ending September 30, 2021.
12 Calendar quarter ending September 30, 2021.
13 Treasury OIG has a pre-defined list of risk indicators that are triggered based on data submitted
by recipients in the FPR submissions that meet certain criteria. Castro reviewed these results
provided by Treasury OIG for New York City.
14 A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
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Desk Review of New York City
The number of transactions (25) we selected to test were based on New York
City’s total CRF award amount and our overall risk assessment of New York City.
To allocate the number of transactions (25) by obligation type (Contracts greater
than or equal to $50,000 and Aggregate Payments to Individuals), we compared
the obligation type dollar amounts as a percentage of cumulative obligations for
Cycle 6.15
Background
The CARES Act appropriated $150 billion to establish the CRF. Under the CRF,
Treasury made payments for specified uses to States; eligible units of certain local
governments; the District of Columbia; U.S. Territories, including the
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands; and Tribal
governments. Treasury issued a CRF payment to New York City for
$1,454,710,277.70. The CARES Act stipulates that a recipient may only use the
funds to cover costs that—
(1) are necessary expenditures incurred due to the public health emergency
with respect to the coronavirus disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of
March 27, 2020; and
(3) were incurred between March 1, 2020 and December 31, 2021.16
Section 15011 of the CARES Act requires each covered recipient17 to submit to
Treasury and the PRAC, no later than 10 days after the end of each calendar
quarter, a report that contains (1) the total amount of large covered funds18,19
received from Treasury; (2) the amount of large covered funds received that were
expended or obligated for each project or activity; (3) a detailed list of all projects
or activities for which large covered funds were expended or obligated; and (4)
15 Calendar quarter ending September 30, 2021.
16 P.L. 116-260 (December 27, 2020). The period of performance end date of the CRF was extended
through December 31, 2021 by the Consolidated Appropriations Act, 2021. The period of
performance end date for tribal entities was further extended to December 31, 2022 by the State,
Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act,
Division LL of the Consolidated Appropriations Act, 2023, P.L. 117-328, December 29, 2022, 136
Stat. 4459.
17 Section 15011 of P.L. 116-136 defines a covered recipient as any entity that receives large
covered funds and includes any State, the District of Columbia, and any territory or possession of
the United States.
18 Section 15010 of P.L. 116-136 defines covered funds as any funds, including loans, that are made
available in any form to any non-Federal entity, not including an individual, under Public Laws 116
123, 127, and 136, as well as any other law which primarily makes appropriations for Coronavirus
response and related activities.
19 Section 15011 of P.L. 116-136 defines large covered funds as covered funds that amount to more
than $150,000.
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Desk Review of New York City
detailed information on any level of sub-contracts or sub-grants awarded by the
covered recipient or its sub-recipients.
The CARES Act assigned Treasury OIG the responsibility for compliance
monitoring and oversight of the receipt, disbursement, and use of CRF proceeds.
Treasury OIG also has authority to recoup funds in the event it is determined that
a recipient failed to comply with the requirements of subsection 601(d) of the
Social Security Act, as amended, (42 U.S.C. 801(d)).
Desk Review Results
Based on Castro’s review of the FPR Checklists above, we determined New York
City did not comply with the reporting timeline as required under the Department
of the Treasury OIG’s Guidance OIG-CA-20-021, Coronavirus Relief Fund Reporting
and Record Retention Requirements. New York City completed an FPR for Cycles
2,20 5,21 and 6;22 however, they did not complete FPRs for Cycles 1,23 3,24 and 4.25
Summary of Testing Results
Transactions selected for detailed review were supported by documentation and
were allowable expenditures in accordance with the CARES Act and Treasury’s
guidance. We noted that the Contracts greater than or equal to $50,000 and
Aggregate Payments to Individuals tested were necessary expenditures due to the
COVID-19 public health emergency, were not accounted for in the budget most
recently approved as of March 27, 2020, and were incurred during the covered
period. The transactions selected for testing were not selected statistically and
therefore results cannot be extrapolated to the total universe of transactions.
The following table includes the total cumulative expenditure population amount
for Cycle 626, Cycle 6 reclassifications made by New York City in Cycle 827, the
revised Cycle 6 cumulative expenditure amount after reclassifications made in
Cycle 8, and the cumulative expenditure amount tested. Additionally, this table
includes a summary of Castro’s testing results over cumulative expenditure
transaction balances. In the far-right column, we have identified the expenditures
that Castro tested without exceptions noted. We did not identify any questioned
20 Calendar quarter ending September 30, 2020.
21 Calendar quarter ending June 30, 2021.
22 Calendar quarter ending September 30, 2021.
23 Calendar quarter ending June 30, 2020.
24 Calendar quarter ending December 31, 2020.
25 Calendar quarter ending March 31, 2021.
26 Calendar quarter ending September 30, 2021.
27 Calendar quarter ending March 31, 2022.
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–
-
-
-
Desk Review of New York City
costs as the result of our desk review. See Desk Review Results section below this
table for a detailed discussion of results.
Summary of Expenditure Testing and Recommended Results As of Cycle 628
Payment Type
Cumulative
Expenditures as
of Cycle 6
(Population
Amount)
Cycle 6
Reclassified
Amount (Made
in Cycle 8)29
Revised Cycle 6
Cumulative
Expenditures
After
Reclassification
(Made in Cycle 8)
Cumulative
Expenditure
Tested Amount
Exception Noted: IPA
Recommended for
Treasury OIG Follow up
Castro
Reviewed
Value Without
Exception
(per Support)
Unsupported
Ineligible
Contracts >=
$50,000
$ 56,965,538.59
$
-
$
56,965,538.59
$ 45,000,000.00
$
-
$
-
$ 45,000,000.00
Grants >=
$50,000
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Loans >=
$50,000
$
1,141,500.00
$ (1,141,500.00)
$
-
$
-
$
-
$
-
$
-
Transfers >=
$50,000
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Direct
Payments >=
$50,000
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Aggregate
Reporting <
$50,000
$ 30,548,827.29
$(29,622,632.42)
$
926,194.87
$
-
$
-
$
-
$
-
Aggregate
Payments to
Individuals (in
any amount)
$833,248,812.00
$
-
$
833,248,812.00
$669,299,674.72
$
-
$
-
$669,299,674.72
Totals30
$921,904,677.88
$(30,764,132.42)
$
891,140,545.46
$714,299,674.72
$
$
$714,299,674.72
Castro determined that New York City complied with the CARES Act and
Treasury’s Guidance for all payment types. However, Castro tested a $45,000,000
contract, and noted that part of the contract was a sub-contract to issue loans and
cover related fees for a federal CRF contribution amount of $6,000,000. The loans
tested had maturity dates in 2025 and 2026; therefore, we notified Treasury OIG
about New York City’s potential for future loan repayments so that Treasury OIG
can coordinate with Treasury management for the monitoring and return of funds.
28 Calendar quarter ending September 30, 2021.
29 New York City removed previously duplicate obligations and expenditures from Loans greater
than or equal to $50,000 in the amount of $1,141,500 and Aggregate Reporting less than $50,000
(Loans and Grants) in the amount of $29,622,632.42 in Cycle 8 as these were correctly included
within Contracts greater than or equal to $50,000.
30 The amounts within this table are the cumulative expenditures amounts reported within
GrantSolutions. Additionally, the obligation amounts for Loans greater than or equal to $50,000,
Loans less than $50,000 (reported within Aggregate Reporting less than $50,000), and Grants less
than or equal to $50,000 (reported within Aggregate Reporting less than $50,000) were also
reclassified.
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Desk Review of New York City
Conclusion
Based on our review of New York City’s documentation supporting the uses of
CRF proceeds as reported in the GrantSolutions portal, we determined the
transactions were adequately supported and the use of CRF proceeds complied
with the CARES Act and Treasury’s Guidance. Additionally, New York City’s risk of
unallowable use of funds is low. Castro is not recommending Treasury OIG
perform an audit of New York City. However, we notified Treasury OIG about New
York City’s potential for future loan repayments so that Treasury OIG can
coordinate with Treasury management for the monitoring and return of funds.
*****
All work completed with this letter complies with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Federal Offices of
Inspectors General, which require that the work adheres to the professional
standards of independence, due professional care, and quality assurance to
ensure the accuracy of the information presented.31 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
31 https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
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