Audit Report - Oig 23 032 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of The Communi
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Treasury Office of Inspector General Audit Report OIG-23-032, Audit of the Community Development Financial Institutions Fund's Award and Post-Award Administration of the CDFI Rapid Response Program, dated September 13, 2023, addressed to Marcia Sigal, Acting Director of the CDFI Fund. The audit scope included CDFI RRP awards approved as of June 15, 2021 for 863 recipients totaling $1.25 billion. The report states that OIG selected a statistical sample of 91 CDFI RRP payments totaling $117.03 million and a non-statistical sample of five recipients. In brief, it states that CDFI Fund management documented the awards process across multiple standard operating procedures consistent with the GAO Green Book and accurately calculated the awards.
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Audit Report
OIG-23-032
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of the Community Development
Financial Institutions Fund’s Award and Post-
Award Administration of the CDFI Rapid
Response Program
September 13, 2023
Office of Inspector General
Department of the Treasury
This Page Intentionally Left Blank
Contents
Audit Report
Results in Brief ...................................................................................................2
Background ........................................................................................................3
Audit Results .................................................................................................... 10
The CDFI Fund Accurately Administered CDFI RRP Award Payments and Designed and
Implemented Post-award Processes to Comply With the CAA, 2021, Federal Guidance,
and Policies and Procedures ............................................................................... 10
Appendices
Appendix 1: Objective, Scope, and Methodology .................................................. 17
Appendix 2: Management Response .................................................................... 24
Appendix 3: Major Contributors to This Report ..................................................... 25
Appendix 4: Report Distribution .......................................................................... 26
Abbreviations
AMIS Awards Management Information System
Assistance Agreement CDFI RRP Assistance Agreement
BFS Bureau of the Fiscal Service
CAA, 2021 Consolidated Appropriations Act, 2021
CDFI Community Development Financial Institutions
CDFI ERP CDFI Equitable Recovery Program
CDFI RRP CDFI Rapid Response Program
CFR Code of Federal Regulations
COVID-19 Coronavirus Disease 2019
FSA Financial Statement Audit
FY Fiscal Year
GAO U.S. Government Accountability Office
Green Book GAO’s Standards for Internal Control in the Federal
Government
FM Financial Manager
NOFA Notice of Funding Availability
OCME Office of Compliance Monitoring and Evaluation
OMB Office of Management and Budget
i
OIG Treasury Office of Inspector General
PM Program Manager
SAM System for Awards Management
SOP Standard Operating Procedure
TLR Transaction Level Report
Treasury Department of the Treasury
Uniform Guidance Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards, 2 CFR Part 200
September 13, 2023
Marcia Sigal
Acting Director of the Community Development Financial
Institutions Fund
This report presents the results of our audit of the Community
Development Financial Institutions (CDFI) Fund’s Award and Post-
Award Administration of the CDFI Rapid Response Program (CDFI
RRP) authorized by Title V, Subtitle B in Division N of the
Consolidated Appropriations Act, 2021 (CAA, 2021) 1 to provide
emergency support to CDFIs 2 and communities responding to the
economic impact of the Coronavirus Disease 2019 (COVID-19).
The Department of the Treasury’s (Treasury) Office of Inspector
General (OIG) is required to submit a report twice a year to
Congress 3 and Treasury on the oversight provided for the programs
established under Subtitle B, including any recommendations for
improvement. In accordance with this mandate, we conducted this
audit.
The objective of our audit was to assess the CDFI Fund’s award
process for ensuring the accuracy of the CDFI RRP payments and
the design of the post-award administration to include recipient
monitoring in compliance with applicable laws, regulations, and
policies and procedures. The scope of our audit included, but was
not limited to, reviewing CDFI RRP award documentation, award
terms and conditions, post-award policies and procedures, and any
performance measurements and reporting to monitor recipient
1
P.L. 116-260, Consolidated Appropriations Act, 2021 (December 27, 2020).
2
A CDFI must have a primary mission of promoting community development. The CDFI Fund will
consider whether the activities of the entity are purposefully directed toward improving the social
and/or economic conditions of underserved people (which may include low-income persons or
persons who lack adequate access to capital and/or financial services) and/or residents of
economically distressed communities.
3
The committees of Congress named under Subtitle B include the Committee on Financial Services of
the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the
Senate.
Audit of the Community Development Financial Institutions Fund’s
Award and Post-Award Administration of the CDFI Rapid Response
Program (OIG-23-032) 1
compliance with terms and conditions of awards. Our audit scope
included CDFI RRP awards approved as of June 15, 2021, for 863
recipients totaling $1.25 billion.
To accomplish our audit objective, we reviewed applicable Federal
laws, regulations, and guidance; reviewed CDFI Fund
documentation and policies and procedures related to the
administration of CDFI RRP awards, to include recipient monitoring;
reviewed executed CDFI RRP Assistance Agreements 4 (Assistance
Agreements); and interviewed CDFI Fund personnel. To assess the
accuracy of award payments, we selected a statistical sample of
91 CDFI RRP payments to recipients, totaling $117.03 million,
from the population of 968, 5 totaling approximately $1.18 billion
as of August 4, 2022. 6 We also selected a non-statistical sample
of five CDFI RRP award recipients for the purpose of assessing the
design of the CDFI Fund’s post-award administration.
We conducted our fieldwork remotely between June 2022 and
May 2023. Appendix 1 contains a more detailed description of our
audit objective, scope, and methodology.
Results in Brief
In brief, we found that CDFI Fund management documented the
CDFI RRP awards process across multiple standard operating
procedures (SOPs) consistent with the U.S. Government
Accountability Office’s (GAO) Standards for Internal Control in the
Federal Government (Green Book). 7 CDFI Fund management also
accurately calculated CDFI RRP awards and administered them in
accordance with the CAA, 2021 and the Office of Management
4
The Assistance Agreement is a legally binding contract between the CDFI Fund and the recipient. It
contains the following key components: annual reporting requirements and associated deadlines;
performance goals and measures; authorized activities for award funds; general award terms and
conditions; and schedules for other forms of award, as applicable.
5
CDFI RRP awards were distributed to 863 recipients, and such recipients could receive an initial
payment and no more than two subsequent payments totaling the award amount.
6
As of August 4, 2022, the remaining funds approved for awards had yet to be disbursed.
7
The Green Book sets the standards for an effective internal control system for Federal agencies and
provides the overall framework for designing, implementing, and operating an effective internal
control system.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 2
and Budget’s (OMB) Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards, 2 Code of
Federal Regulations (CFR) Part 200 (Uniform Guidance). 8 However,
the CDFI Fund did not comply with subsequent payment review
and approval timelines for 2 of the 91 payments we tested.
Despite the CDFI Fund’s delays in approving the recipients’
subsequent award payment requests, we do not believe there is a
systemic issue with the timeliness of CDFI RRP payment reviews.
The CDFI Fund designed and implemented the CDFI RRP post-
award administration process, to include recipient monitoring, in
compliance with the CAA, 2021, Uniform Guidance, and GAO
Green Book. CDFI Fund management developed post-award and
monitoring SOPs as well as the Assistance Agreement, which
incorporated Uniform Guidance requirements to recipients.
Furthermore, management established: (1) procedures for
evaluating CDFI RRP annual compliance reports; (2) a non-
compliance process; and (3) a process for closing CDFI RRP
awards. Finally, the CDFI Fund provided CDFI RRP available data
for Treasury’s report on the impact of programs under the CAA,
2021. Accordingly, we did not make any recommendations in this
report.
As part of our reporting process, we provided CDFI Fund
management an opportunity to comment on a draft of this report.
In a written response, CDFI Fund management acknowledged there
was no recommendation and stated that they appreciated the work
of Treasury OIG staff, and the opportunity to review and provide a
response to the report. The CDFI Fund’s management response, in
its entirety, is included in appendix 2 of this report.
Background
The CDFI Fund
The CDFI Fund was established by the Riegle Community
Development and Regulatory Improvement Act of 1994 9 with the
8
The Uniform Guidance is an authoritative set of rules and requirements for Federal awards.
9
P.L. 103-325, Riegle Community Development and Regulatory Improvement Act of 1994 (September
23, 1994).
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 3
purpose of promoting economic revitalization and community
development through investment in and assistance to CDFIs.
The CDFI Fund generates economic opportunity in underserved,
low-income communities by expanding access to credit, capital,
and financial services through: (1) the Bank Enterprise Award
Program; (2) the Capital Magnet Fund; (3) the CDFI Bond
Guarantee Program; (4) the CDFI Equitable Recovery Program (CDFI
ERP); (5) the CDFI Program; (6) the CDFI RRP; (7) the Economic
Mobility Corps; (8) the Native American CDFI Assistance Program;
(9) the New Markets Tax Credit Program; and (10) the Small Dollar
Loan Program. Since inception, the CDFI Fund has provided more
than $5.5 billion through a variety of monetary award programs,
$66 billion in tax credits through the New Markets Tax Credit
Program, and guaranteed more than $2.1 billion in bonds through
the CDFI Bond Guarantee Program. CDFI Fund programs aim to
increase the impact of CDFIs and other community development
organizations in economically distressed and underserved
communities.
The CDFI Fund is led by a Director 10 who is supported by a Senior
Advisor, the Office of Legal Counsel, the Chief Financial Officer,
and the Office of Legislative and External Affairs. There are two
Deputy Directors who report to the Director, the Deputy Director
for Finance and Operations and the Deputy Director for Policy and
Programs. The Deputy Director for Finance and Operations leads
policy development, operating procedures, internal controls, as well
as short- and long-term strategic plans. The Deputy Director for
Policy and Programs leads the CDFI Fund’s strategic vision through
the design and management of the CDFI Fund’s assistance
programs. The Office of Compliance Monitoring and Evaluation
(OCME) 11 Program Manager (PM), who is responsible for the
management of the CDFI Fund’s compliance reporting and
monitoring functions, reports to the Deputy Director of Finance and
10
As of May 8, 2023, the Deputy Director of Policy and Programs is the Acting Director of the CDFI
Fund. The Senior Advisor to the Deputy Director of Policy and Programs is currently the Acting
Deputy Director of Policy and Programs.
11
OCME supports CDFI RRP recipients throughout the allocation and post-award period of
performance. Additionally, OCME is responsible for monitoring and reviewing recipient activities for
compliance with the terms and conditions set forth in the Assistance Agreements.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 4
Operations. The CDFI RRP is led by a PM who reports to the
Deputy Director of Policy and Programs.
CDFI RRP
The CAA, 2021 appropriated $3 billion to the CDFI Fund to provide
emergency support for CDFIs and communities responding to the
COVID-19 pandemic. Of the $3 billion appropriated, up to
$1.25 billion 12 shall be used to provide grants to CDFIs to support,
prepare for, and respond to the economic impact of COVID-19. Of
the $1.25 billion, no less than $25 million must benefit Native
communities. 13 The CDFI Fund must provide grants using a formula
that takes into account criteria such as certification status,
financial and compliance performance, portfolio and balance sheet
strength, a diversity of CDFI business model types, and program
capacity. Lastly, the CDFI Fund must have made funds available no
later than 60 days after enactment of the legislation on
December 27, 2020. Funds remained available until
September 30, 2021.
The CDFI Fund made the appropriated funds available on
February 25, 2021, meeting the mandated deadline of no later than
60 days after enactment of the CAA, 2021. Additionally, the CDFI
Fund published the CDFI RRP Notice of Funding Availability (NOFA)
in the Federal Register on February 26, 2021. CDFIs were required
to be certified 14 by the CDFI Fund as of the date of the CDFI RRP
NOFA publication to be eligible to apply for an award.
On June 15, 2021, the CDFI Fund announced that 863 CDFIs were
approved for awards totaling $1.25 billion. CDFI RRP recipients
included 58 CDFIs awarded $54.6 million for investments in Native
12
The $1.25 billion is allocated to the CDFI RRP. The remaining $1.75 billion is allocated to the CDFI
ERP and is not within the scope of this audit.
13
Native Communities refers to Native American, Alaska Native, or Native Hawaiian populations or
Native American areas described as Federally-designated reservations, Hawaiian homelands, Alaska
Native Villages, and U.S. Census Bureau-designated Tribal Statistical Areas.
14
A certified CDFI is an entity that the CDFI Fund has officially notified that it meets all CDFI
certification requirements, which include that the CDFI: (1) is a legal entity at the time of certification
application; (2) has a primary mission of promoting community development; (3) is a financing entity;
(4) primarily serves one or more target markets; (5) provides development services in conjunction
with its financing activities; (6) maintains accountability to its defined target market; and (7) is a
non-government entity and not under the control of any government entity (Tribal governments are
excluded).
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 5
American, Native Alaskan, and Native Hawaiian communities. CDFI
RRP recipients are located in 48 states as well as the District of
Columbia, Guam, and Puerto Rico. Figure 1 details the CDFI RRP
cumulative award allocations and award recipients.
Figure 1. CDFI RRP Cumulative Award Allocations and Award
Recipients
Source: Generated by Treasury OIG based on the CDFI Fund’s CDFI RRP
Award Announcement on June 15, 2021.
CDFI RRP award amounts ranged from $200,000 to
$1.826 million. CDFI RRP recipients that did not have audited
financial statements were limited to the minimum award size of
$200,000. The period of performance for CDFI RRP awards is the
recipient’s 2 fiscal years (FYs) after the date of award
announcement.
CDFI RRP General Requirements
In addition to being certified by the CDFI Fund as of the date of the
CDFI RRP NOFA, CDFIs must have complied with all outstanding
CDFI awards, allocations, or bond guarantee requirements, as well
as meeting benchmarks for programmatic and financial safety and
soundness. The CDFI Fund allowed CDFIs to request up to 150
percent of their “Total Financial Products Closed in an Eligible
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 6
Market and/or Target Market” 15 for their most recent historic fiscal
year, or the minimum award amount of $200,000, whichever was
greater.
To submit a CDFI RRP application, the CDFI must have been
registered in Grants.gov, 16 the System for Award Management
(SAM.gov), 17 and the CDFI Fund’s Awards Management
Information System (AMIS). 18 The CDFI must have also obtained an
Employer Identification Number, 19 a unique business identifier
number, 20 and ensured consistency of information between
SAM.gov and AMIS. Additionally, the CDFI must have submitted
the OMB Standard Form 424 “Application for Federal Assistance,”
in Grants.gov prior to submitting the CDFI RRP application in AMIS.
CDFI RRP recipients must expend 90 percent of their first payment
amount in the first year of the period of performance and 100
percent of the total award amount by the period of performance
end date. CDFI RRP recipients that received more than the
minimum award amount were required to close financial products
in an eligible market and/or target market consisting of: (1) 50
percent of the award amount by the end of the first year of the
performance period; and (2) 70 percent of the award amount by
the end of the second year of the performance period. CDFIs that
15
The “Total On-Balance Sheet Financial Products Closed in Eligible Markets and/or Target Markets” is
the sum of the following application financial data inputs in the CDFI RRP application: (1) on-balance
sheet loans closed in eligible markets and/or target markets; (2) on-balance sheet loan guarantees
made in eligible markets and/or target markets; and (3) total equity investments closed in eligible
markets and/or target markets.
16
Grants.gov is a centralized location for grant seekers to find and apply for Federal funding
opportunities and is managed by the Department of Health and Human Services.
17
SAM.gov is a web-based, government-wide application that collects, validates, stores, and
disseminates business information about the Federal government’s trading partners in support of the
contract awards, grants, and electronic payment processes.
18
AMIS is an enterprise-wide business system that supports all CDFI Fund programs through each
phase of the programs’ life-cycle, including processes related to certification, program awards and
allocations, pre-award, compliance reporting, and data analysis. Additionally, applicants use AMIS to
create, complete, and submit applications.
19
An Employer Identification Number, also known as a Federal Tax Identification Number, is used to
identify a business entity.
20
A unique business identifier number is a nine-digit non-indicative numbering sequence and is assigned
at the lowest organization level, i.e. business locations with a unique, separate, and distinct
operations. It is assigned to all types of business organizations, including partnerships and non-
profits. In April 2022, the General Services Administration transitioned from a unique business
identifier number to a new Unique Entity Identifier in SAM.gov. For the CDFI RRP, the unique
business identifier number was used in the application process.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 7
received awards to serve Native Communities were also required to
close financial products in Native Communities equivalent to the
same percentages. CDFI RRP recipients could satisfy this
requirement by using the CDFI RRP award or other available funds
on its balance sheet.
CDFI RRP Eligible Activities
CDFI RRP awards may be used for selected lines of business,
including commercial real estate, small business, consumer
financial products, consumer financial services, and affordable
housing. Additionally, the CDFI RRP awards may be used on five
eligible activity categories that support the delivery of financial
products and services that include: (1) financial products (e.g.
loans and equity investments); (2) financial services (e.g. providing
checking and savings accounts); (3) loan loss reserves (e.g. award
funds set aside in the form of cash reserves to cover losses on
loans); (4) development services (e.g. activities that promote
community development); and (5) capital reserves (e.g. award
funds set aside as reserves to support a CDFI’s ability to leverage
other capital for a specific purpose, such as providing financing).
The CDFI Fund noted that only regulated institutions 21 may expend
a CDFI RRP award for financial services and capital reserves.
The CDFI RRP award may also be used in seven categories that
support operations: (1) compensation–personal services (i.e.
compensation for services CDFI employees delivered during the
CDFI RRP’s period of performance); (2) compensation–fringe
benefits (i.e. funds paid to cover allowances and services a CDFI
provides to its employees in the form of compensation in addition
to its employees’ salaries and wages); (3) professional service
costs (e.g. costs for consultant and professional services); (4)
travel costs (e.g. transportation and lodging costs); (5) training and
education costs (e.g. training a CDFI conducts for its employees);
(6) equipment (e.g. information technology systems); and (7)
supplies (i.e. tangible personal property costing less than $5,000).
CDFIs may use “the greater of $200,000” or 15 percent of the
CDFI RRP award on these seven categories.
21
Regulated CDFIs include insured credit unions, insured depository institutions, state-insured credit
unions, and depository institution holding companies.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 8
CDFI RRP Reporting Requirements
CDFI RRP recipients were required to submit the following annual
compliance reports: (1) Transaction Level Report (TLR); (2) Uses of
Award Report; (3) Performance Progress Report; (4) Financial
Statement Audit (FSA) Report (if applicable); and (5) Single Audit
Report (if applicable). Additionally, the CDFI Fund may add or
modify reporting requirements to enable the Secretary of the
Treasury to conduct a study of the CDFI RRP impact, if needed.
The TLR provides transaction level information, such as the CDFI’s
transaction profile, borrower and investee profile, as well as award
impacts. The Uses of Awards Report details how CDFI RRP award
funds are being used, including the total award amount uses for
the reporting period. The Performance Progress Report details the
recipient’s progress towards meeting the specific required
benchmarks in their Assistance Agreement. The TLR is due 6
months after the CDFI’s FY end date, and the Uses of Award
Report and Performance Progress Report are due 3 months after
the CDFI’s FY end date.
As it relates to the FSA Report, non-profit recipients (including
insured credit unions and state-insured credit unions), for-profit
recipients, depository institution holding companies, and insured
depository institutions must submit the report in AMIS, along with
the recipient’s statement of financial condition audited or reviewed
by an independent certified public accountant. The FSA Report is
due 6 months after the FY end date. Regarding the Single Audit
Report, a non-profit recipient must complete an annual Single Audit
Report pursuant to 2 CFR 200.500 if it expends $750,000 or more
in Federal awards in its FY, or such other dollar threshold
established by OMB pursuant to 2 CFR 200.501. If a Single Audit
is required, the recipient must submit the audit report to the
Federal Audit Clearinghouse.
Treasury Impact Study on Pandemic Programs Established
Under CAA, 2021
Per Section 525 of the CAA, 2021, Treasury must conduct a study
of the impact of the programs established under the legislation on
low- and moderate-income and minority communities. Section 525
further requires that no later than 18 months after legislation
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 9
enactment, Treasury was to submit a report to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate
on the results of the study, to include, to the extent possible,
results disaggregated by ethnic group.
Audit Results
The CDFI Fund Accurately Administered CDFI RRP Award
Payments and Designed and Implemented Post-award
Processes to Comply With the CAA, 2021, Federal
Guidance, and Policies and Procedures
The CDFI Fund documented its CDFI RRP awards process across
multiple SOPs consistent with the GAO Green Book. Additionally,
the CDFI Fund accurately calculated CDFI RRP award amounts and
processed them in accordance with the CAA, 2021 and Uniform
Guidance. We tested 91 payments, totaling $117.03 million, from
a population of 968, totaling approximately $1.18 billion, and
found two instances where the CDFI Fund did not adhere to
subsequent payment review and approval timelines. However,
given the circumstances behind the delays, we do not believe there
is a systemic issue surrounding the timeliness of the CDFI RRP
payment reviews.
The CDFI Fund also designed and implemented the CDFI RRP post-
award administration, to include monitoring, in compliance with the
CAA, 2021, Uniform Guidance, and GAO Green Book. Finally, the
CDFI Fund provided CDFI RRP available data for Treasury’s report
on the impact of programs under the CAA, 2021. Accordingly, we
did not make any recommendations.
The CDFI Fund Documented the CDFI RRP Award
Payment Process
To administer and disburse CDFI RRP awards to recipients, the
CDFI Fund documented its award payment process across multiple
SOPs, consistent with GAO Green Book Principle 12, which states
that “management should implement control activities through
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 10
policies.” Additionally, the CDFI Fund conducts an annual review of
their payment SOPs and updates them on a regular basis.
The initial CDFI RRP award payment process begins automatically
after the recipient signs the Assistance Agreement in AMIS. After a
series of reviews and approvals by the CDFI RRP and OCME
Portfolio Managers, AMIS generates an initial payment request that
is routed to the Financial Manager (FM). After the FM conducts a
due diligence review and documents approval, AMIS sends the
Bureau of the Fiscal Service (BFS) Grants and Loans Branch a daily
report with payments ready for processing. Thereafter, a BFS
technician enters the payment information into Treasury’s financial
system, and the BFS Cash Branch disburses the funds to the
recipient. BFS subsequently marks the initial payment request as
“paid” in AMIS and closes out the request. If the BFS Cash Branch
rejects the payment, the BFS Grants and Loans Branch notifies the
CDFI Fund, who then works with the recipient to remediate the
issue.
Subsequent award payment requests follow a process similar to
the initial payment request (described above); however, unlike the
initial payment requests, the recipient submits subsequent payment
requests in AMIS. Per the Assistance Agreement, recipients must
have expended at least 90 percent of the initial award payment
prior to requesting a subsequent payment.
The CDFI Fund also has a documented process for when a recipient
is noncompliant with its Assistance Agreement. Once the CDFI
Fund determines that a recipient is noncompliant, the PM may
request the recipient return the funds. After BFS receives the
returned funds, they will create an accounts receivable receipt and
invoice for the money returned. Additionally, the FM creates a
negative payment entry in AMIS, so the funds can be de-obligated
and the award can be closed out.
The CDFI Fund Administered CDFI RRP Awards in
Accordance With the CAA, 2021, Federal Guidance, and
Policies and Procedures
The CDFI Fund administered the CDFI RRP awards in accordance
with the CAA, 2021. The CDFI Fund determined eligibility of award
recipients by performing compliance and certification initial
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 11
eligibility checks. The CDFI Fund also performed application
reviews, which included compliance and certification reviews, as
well as Do Not Pay 22 checks. Lastly, the CDFI Fund awarded nearly
$55 million to 58 Native CDFIs, which met the requirements of the
CAA, 2021 to allocate a minimum of $25 million to Native
communities.
The CDFI Fund issued CDFI RRP award payments in accordance
with applicable Uniform Guidance requirements. Per 2 CFR
§200.305, “advance payments to a non-Federal entity must be
limited to the minimum amounts needed and be timed to be in
accordance with the actual, immediate cash requirements of the
non-Federal entity in carrying out the purpose of the approved
program or project.” Furthermore, 2 CFR §200.305 requires that
“whenever possible, advance payments must be consolidated to
cover anticipated cash needs for all Federal awards made by the
Federal awarding agency to the recipient.”
Consistent with 2 CFR §200.305, the CDFI Fund provided advance
payments to recipients based on the amount indicated in their
Assistance Agreements. Recipients were expected to expend funds
on CDFI RRP activities within the first 12 months of the award
announcement date. Additionally, the CDFI Fund limited recipients
to two subsequent CDFI RRP payments unless otherwise waived.
The CDFI Fund accurately calculated CDFI RRP awards, consistent
with CDFI RRP NOFA requirements and the “Step 4: CDFI RRP
Award Amount Determination Process” SOP. The CDFI Fund
created a “CDFI RRP Award Sizing Workbook” and placed all CDFI
RRP applicants through tests and conditions to ensure awards were
calculated and adjusted accordingly. We tested 91 payments and
found that the CDFI Fund ensured: (1) the award amount did not
exceed the recipient’s requested amount; and (2) the award
amount did not exceed either the 150 percent of the dollar volume
of the recipient’s total on-balance sheet financial products closed in
an eligible market or target market for its most recent historic FY or
the minimum award size ($200,000). Additionally, the CDFI Fund:
22
The Do Not Pay Portal allows Federal agencies to check multiple data sources to verify initial and
ongoing eligibility of a vendor, grantee, loan recipient, or other beneficiary to receive Federal
payments. Recipients may be ineligible because of previous default on Federal debt, fraud, or other
disqualifying factors.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 12
(1) identified all award sizing flags; 23 (2) determined final award
amounts based on the application of award sizing flags; (3)
finalized first and subsequent payment amounts; and (4)
documented award sizing adjustments, as applicable.
The CDFI Fund generally approved CDFI RRP subsequent payment
requests from recipients in accordance with policies and
procedures. However, the CDFI Fund did not adhere to subsequent
payment review timelines for 2 of 91 payments we tested. The
“Subsequent Payment Request Job Aid” requires the CDFI RRP
Program Portfolio Manager to review subsequent payment requests
within 1 day. But the CDFI RRP Program Portfolio Manager
reviewed and approved one recipient’s second payment request 1
day late. Additionally, the “CDFI Compliance Monitoring and
Evaluation (CME) Unit SOPs” and “Subsequent Payment Request
Job Aid” require OCME to conduct reviews of subsequent payment
requests within 3 to 5 days. However, OCME staff and the CDFI
RRP PM reviewed and approved another recipient’s subsequent
payment request 18 days late.
Per the CDFI Fund, the review and approval of subsequent
payment requests are one of several ongoing tasks that the OCME,
as well as program staff, are assigned to at any given point in time.
The changes to timelines may occur when there are: (1) staffing
transitions; (2) increased workloads and competing priorities; and
(3) compliance issues. Additionally, the CDFI Fund experienced
delays in the hiring process, which resulted in existing staff filling
multiple roles. Despite the CDFI Fund’s delays in approving the
recipients’ subsequent payment requests, we believe there is not a
systemic issue with the timeliness of CDFI RRP payment reviews.
The CDFI Fund Designed and Implemented Post-award
Processes, to Include Recipient Monitoring, in Accordance
With Federal Guidance
The CDFI Fund established the CDFI RRP post-award administration
and monitoring processes to comply with applicable requirements
outlined in the CDFI Program regulations (12 CFR Part 1805). For
23
The award sizing flags included in the “CDFI RRP Award Sizing Workbook” were the following: (1)
award recommendation flag; (2) award request amount flag; (3) 150 percent total financing activities
flag; (4) no audit or regulator reviewed financial statements flag; and (5) level of concern score flag.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 13
example, 12 CFR §1805.803(e) requires recipients to submit
information that would allow the CDFI Fund to review recipients’
progress toward satisfying terms and conditions of its assistance
agreement. Accordingly, the CDFI Fund designed the Assistance
Agreement to include annual CDFI RRP reporting requirements
(including deadlines) for recipients.
The CDFI Fund designed control activities for the CDFI RRP post-
award and monitoring processes in accordance with GAO Green
Book Principle 10 that states “management should design control
activities to achieve objectives and respond to risks.” The CDFI
Fund has a non-compliance process in place for when a recipient
fails to submit its applicable compliance reports. OCME follows the
non-compliant overdue report process, which entails following up
with the recipient and providing an additional 30 days to submit
the overdue report. If the recipient does not submit the report
within the 30 days, and the CDFI Fund does not grant an
extension, the CDFI Fund initiates the non-compliance process.
This process consists of sending a non-compliance letter to the
recipient, which notes any sanctions that will be imposed.
Consistent with GAO Green Book Principle 12, the CDFI Fund
documented the CDFI RRP post-award and monitoring processes
across multiple SOPs. For example, the “Compliance Monitoring
and Evaluation Unit Standard Operating Procedures,” outlined
standard sanction recommendations, non-compliant report process
procedural steps, and procedures for reviewing recipient activities
within the requirements of the Assistance Agreement.
The CDFI Fund also designed control activities within AMIS to
achieve validity, completeness, and accuracy of compliance reports
consistent with GAO Green Book Principle 11 that states
“management should design the entity’s information system and
related control activities to achieve objectives and respond to
risks.” For example, the CDFI Fund implemented validations and
business rules within AMIS that prevent: (1) submission of
compliance reports unless all required data has been entered; (2)
inaccurate data entry; and (3) compliance reports from being
submitted until the recipient corrects all errors. Additionally, the
CDFI Fund implemented report review notifications within AMIS.
For example, when a recipient submits a compliance report, the
CDFI Fund management receives an AMIS notification. Thereafter,
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 14
management will review the report to determine the recipient’s
progress towards meeting the performance goal benchmarks listed
in the Assistance Agreement.
The CDFI Fund designed the Assistance Agreement to comply with
the Uniform Guidance. Specifically, the CDFI Fund incorporated
some applicable post-award requirements into its Assistance
Agreement, such as 2 CFR §200.329 (Monitoring and Reporting
Program Performance) and 2 CFR §200.339 (Remedies for
Noncompliance). However, the CDFI Fund did not incorporate all
applicable post-award requirements, such as 2 CFR §200.309
(Modifications to Period of Performance) and 2 CFR §200.340
(Termination). Instead, the CDFI Fund included a blanket statement
in the Assistance Agreement for recipients to comply with
applicable government requirements, including the Uniform
Guidance. Lastly, the CDFI Fund established the CDFI RRP post-
award and monitoring processes to comply with the Uniform
Guidance requirements for award closeout. For example, the CDFI
Fund designed a SOP that outlines procedural steps for closing out
or terminating an award.
The CDFI Fund Took Steps to Address Impact Study
Requirements in Section 525 of the CAA, 2021
On August 19, 2022, the Secretary of the Treasury submitted to
Congress the Treasury impact study on pandemic programs report,
entitled, A Report on Progress Implementing Community
Development Investment Programs under Division N, Title V,
Subtitle B of the Consolidated Appropriations Act, 2021. CDFI
Fund management responded to data requests and questions from
Treasury for the impact study; however, the CDFI Fund did not
have impact data on CDFI RRP recipients. This was due to the
impact report’s deadline of June 27, 2022, which was prior to the
TLR deadline of June 30, 2022. Additionally, the CDFI Fund did
not have the capability to disaggregate TLR data by racial or ethnic
groups. This occurred because not all award recipients required
race or ethnic data from end-users and borrowers, and some
recipients were prohibited from collecting racial and ethnic data.
Therefore, Treasury’s impact study report focused on other key
characteristics of CDFI RRP recipients, such as the geographic
location of CDFIs’ headquarters, Native CDFI status, and financial
institution types. As of January 25, 2023, the CDFI Fund was
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 15
considering how to disaggregate results of the impact study by
ethnic group and Treasury was working on a follow-up impact
study report to be released at a later date. 24
******
We appreciate the courtesies and cooperation provided to our staff
during the audit. If you wish to discuss the report, you may
contact me at (202) 927-8782 or Sheila Argüello, Audit Manager,
at (202) 439-2522. Major contributors to this report are listed in
appendix 3. A distribution list for this report is provided as
appendix 4.
/s/
Cecilia Howland
Audit Director, State and Local Fiscal Recovery, RESTORE, and
CDFI Programs
Appendices
24
On June 15, 2023, the CDFI Fund released a “Sources Sought Notice” for a multi-year evaluation of
the CDFI Fund’s CDFI RRP, CDFI ERP, and Treasury’s Emergency Capital Investment Program.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 16
Appendix 1: Objective, Scope, and Methodology
Our audit objective was to assess the Community Development
Financial Institutions (CDFI) Fund’s award process for ensuring the
accuracy of the CDFI Rapid Response Program (CDFI RRP)
payments and the design of the post-award administration to
include recipient monitoring in compliance with applicable laws,
regulations, and policies and procedures.
The scope of our audit included, but was not limited to, a review of
award documentation; award terms and conditions; post-award
policies and procedures; and any performance measurements and
reporting to monitor recipient compliance with terms and conditions
of awards approved as of June 15, 2021, for 863 CDFI RRP
recipients totaling $1.25 billion.
To accomplish the audit objective, we performed the following
procedures:
• Reviewed applicable Federal laws, regulations, and guidance,
including:
o P.L. 116-260, Title V, Subtitle B in Division N of
Consolidated Appropriations Act, 2021 (CAA, 2021),
December 27, 2020;
o P.L. 103-325, Riegle Community Development and
Regulatory Improvement Act of 1994,
September 23, 1994;
o 12 Code of Federal Regulations (CFR) Part 1805,
“Community Development Financial Institutions
Program,” August 31, 2015;
o 2 CFR Part 200, Office of Management and Budget
(OMB), Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), June 13, 2022;
o U.S. Government Accountability Office’s (GAO)
Standards for Internal Control in the Federal
Government (Green Book), September 2014; and
o OMB Circular A-123, “Management’s Responsibility
for Enterprise Risk Management and Internal Control,”
July 15, 2016.
Audit of the Community Development Financial Institutions Fund’s
Award and Post-Award Administration of the CDFI Rapid Response
Program (OIG-23-032) 17
Appendix 1: Objective, Scope, and Methodology
• Reviewed the CDFI Fund’s policies, procedures, and
guidelines related to the administration of the CDFI RRP,
including:
o CDFI RRP Notice of Funding Availability (NOFA),
February 26, 2021;
o “Community Development Financial Institutions Rapid
Response Program (CDFI RRP) Standard Operating
Procedures,” March 24, 2021;
o “Subsequent Payment Job Aid,” provided on
August 26, 2022;
o “Step 4: CDFI RRP Award Amount Determination
Process,” April 19, 2021;
o “FY 2021 Community Development Financial
Institutions Rapid Response Program (CDFI RRP)
Assistance Agreement Generation and Distribution
Guidance,” provided on September 30, 2022;
o “Debriefing Report Creation – Internal Process &
Logistics Guidance,” June 3, 2021;
o “CDFI/NACA Program Assistance Agreement &
Certificate of Good Standing Review Job Aid and
Policies and Procedures,” provided on
August 26, 2022;
o “Job Aid for CDFI Rapid Response Program (CDFI
RRP) Program Manager Signing Assistance
Agreement,” provided on August 26, 2022;
o “Community Development Financial Institutions Fund
Standard Operating Procedures Monetary Programs –
Award Accounting,” provided on February 28, 2023;
and
o “CDFI RRP Frequently Asked Questions (FAQs),”
March 10, 2021.
• Reviewed the CDFI Fund’s policies, procedures, and
guidelines related to the post-award administration and
monitoring of the CDFI RRP, including:
o “Compliance Monitoring and Evaluation Unit Standard
Operating Procedures,” received on July 1, 2022;
o “Certification, Compliance Monitoring and Evaluation
Unit Standard Operating Procedures,” received on
July 29, 2022;
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 18
Appendix 1: Objective, Scope, and Methodology
o “Compliance Monitoring and Evaluation Unit Site Visit
and Desk Review Standard Operating Procedures,”
received on July 29, 2022; and
o “Certification, Compliance Monitoring and Evaluation:
Annual Certification Report Review Policies and
Procedures,” February 14, 2018.
• Reviewed Department of the Treasury (Treasury) Office of
Inspector General (OIG) reports and GAO reports, including,
but not limited to:
o Treasury OIG, Audit of the Community Development
Financial Institutions Fund’s Implementation of the
CDFI Rapid Response Program, OIG-22-023
(December 21, 2021);
o Treasury OIG, Improvements Are Needed in the CDFI
Fund’s Administration of Technical Assistance
Awards, OIG-20-037 (June 12, 2020);
o Treasury OIG, Audit of the Community Development
Financial Institutions Fund’s Financial Statements for
Fiscal Years 2022 and 2021, OIG-23-006
(November 14, 2022); and
o GAO, Community Development Financial Institutions:
Analysis of Annual and Emergency Assistance and
Treasury Efforts to Address Program Risks, GAO-23-
105952 (December 2022).
• To assess the accuracy of award payments, we selected a
statistical sample of 91 CDFI RRP payments to recipients,
totaling $117.03 million, from the population of 968,
totaling approximately $1.18 billion, issued as of August 4,
2022. The sample selection was based on a 90 percent
confidence level with a +/- 7 percent precision rate and a 20
percent anticipated error rate. We used a statistical sample
instead of a judgmental sample because a statistical sample
could be used to project results to the population of 968
payments, whereas the results from a judgmental sample
could not be projected to the population. Our testing resulted
in 2 exceptions out of the 91 payments related to the CDFI
Fund not reviewing payment requests timely. The total of
exceptions projected to the population is 21 based on a
projected percentage of 2.2 percent.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 19
Appendix 1: Objective, Scope, and Methodology
• Reviewed documentation related to the CDFI Fund’s
issuance of CDFI RRP award payments to test for accuracy,
including:
o “Payment Approval Process” flowchart, provided on
September 30, 2022;
o CDFI RRP Assistance Agreement (Assistance
Agreement) template (updated June 16, 2021);
o “CDFI RRP Award Sizing Workbook,” provided on
September 30, 2022;
o “CDFI Certification List” as of February 26, 2021, and
September 14, 2022;
o For each selected recipient:
First payment request;
Second payment request (as applicable);
Third payment request (as applicable);
Internal review record;
Executed Assistance Agreement;
Grant application; and
Assistance Agreement approval history.
• Selected a non-statistical sample of five CDFI RRP award
recipients from a population of 863 recipients to test the
design of the CDFI Fund’s post-award administration, to
include recipient monitoring, and to ensure compliance with
applicable laws, regulations, as well as policies and
procedures. The selection was based on the following
factors: (1) maximum award amount; (2) high compliance
score; (3) high CAMELS 25 rating score; (4) any known
Treasury OIG complaint related to misuse of CDFI RRP
funds; (5) any known issues with a CDFI RRP award to a
recipient; (6) timing of the CDFI Fund’s review; and (7) type
of organization (i.e. regulated, unregulated, or Native CDFI).
The selection of a non-statistical sample was not for the
purpose of projecting results to the population of specific
awards or the overall effectiveness of the program.
• Reviewed reporting requirements and other documentation
relevant to the post-award administration and monitoring of
the CDFI RRP, including:
25
The CAMELS composite rating represents a financial institution’s adequacy of capital, quality of
assets, capability of management, quality and level of earnings, adequacy of liquidity, and sensitivity
to market risk, and ranges from 1 (strongest) to 5 (weakest).
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 20
Appendix 1: Objective, Scope, and Methodology
o Required annual reports outlined in the Assistance
Agreement:
Financial Statement Audit Report (if applicable);
Single Audit Report (if applicable);
Performance Progress Report;
Transaction Level Report;
Uses of Award Report; and
Annual Certification Report.
o Annual report submission deadlines outlined in the
Assistance Agreement; and
o Performance goals outlined in the Assistance
Agreement.
• Reviewed the GAO Green Book to identify the components
and principles of internal control that were significant in the
context of the audit objective. Specifically, we evaluated the
control environment, risk assessment, control activities, and
information and communication components; and assessed
policies, procedures, and guidance (outlined above) against
the following principles:
o Principle 3: Management should establish an
organizational structure, assign responsibility, and
delegate authority to achieve the objectives;
o Principle 5: Management should evaluate performance
and hold individuals accountable for their internal
control responsibilities;
o Principle 7: Management should identify, analyze, and
respond to risks related to achieving the defined
objectives;
o Principle 8: Management should consider the potential
for fraud when identifying, analyzing, and responding
to risks;
o Principle 10: Management should design control
activities to achieve objectives and respond to risks;
o Principle 11: Management should design the entity’s
information system and related control activities to
achieve objectives and respond to risks;
o Principle 12: Management should implement control
activities through policies;
o Principle 13: Management should use quality
information to achieve the entity’s objectives;
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 21
Appendix 1: Objective, Scope, and Methodology
o Principle 14: Management should internally
communicate the necessary quality information to
achieve the entity’s objectives; and
o Principle 15: Management should externally
communicate the necessary quality information to
achieve the entity’s objectives.
• We assessed the reliability of CDFI RRP payment data by: (1)
performing electronic testing of selected data elements for
accuracy and completeness; (2) reviewing existing
information about the payment data and systems that store
the data; and (3) obtaining written statements from the CDFI
Fund officials knowledgeable about the data. We determined
that the data was sufficiently reliable for the purposes of this
audit.
• Performed walkthroughs of the CDFI Fund’s Awards
Management Information System to gain an understanding
of the CDFI Fund’s award process and post-award
administration and monitoring process related to CDFI RRP.
Additionally, we performed a walkthrough to test the design
of the CDFI Fund’s post-award administration and monitoring
for the five non-statistically sampled award recipients in the
Awards Management Information System.
• Interviewed key CDFI Fund personnel responsible for the
award and post-award administration of the CDFI RRP
including:
o Deputy Director for Policy and Programs;
o Deputy Director for Finance and Operations;
o CDFI & Native American CDFI Assistance Program &
CDFI RRP Program Managers;
o Acting Manager for Financial Strategies and Research;
o Program Manager for the Office of Compliance
Monitoring and Evaluation;
o Program Manager for the Office of Certification Policy
and Evaluation;
o Financial Management Manager;
o Senior Accountant; and
o Legal Counsel.
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
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 22
Appendix 1: Objective, Scope, and Methodology
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.
Audit of the Community Development Financial Institutions Fund’s Award
and Post-Award Administration of the CDFI Rapid Response Program
(OIG-23-032) 23
Appendix 2: Management Response
Audit of the Community Development Financial Institutions Fund’s
Award and Post-Award Administration of the CDFI Rapid Response
Program (OIG-23-032) 24
Appendix 3: Major Contributors to This Report
Sheila Argüello, Audit Manager
Alexis Satterwhite, Auditor-in-Charge
Clint Hoellrigl, Auditor
Charles Holmes, Auditor
Raymond Brooks II, Referencer
Audit of the Community Development Financial Institutions Fund’s
Award and Post-Award Administration of the CDFI Rapid Response
Program (OIG-23-032) 25
Appendix 4: Report Distribution
Department of the Treasury
Secretary
Deputy Secretary
Under Secretary for Domestic Finance
Assistant Secretary for Financial Institutions
Deputy Assistant Secretary for Community and Economic
Development
Acting Chief Recovery Officer
Office of Strategic Planning and Performance Management
Office of the Deputy Chief Financial Officer, Risk and Control
Group
Community Development Financial Institutions Fund
Acting Director
Acting Deputy Director of Policy and Programs
Deputy Director of Finance and Operations
Legal Counsel
Office of Management and Budget
OIG Budget Examiner
U.S. Senate
Chairman and Ranking Member
Committee on Banking, Housing, and Urban Affairs
U.S. House of Representative
Chairman and Ranking Member
Committee on Financial Services
Audit of the Community Development Financial Institutions Fund’s
Award and Post-Award Administration of the CDFI Rapid Response
Program (OIG-23-032) 26
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