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DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220
OFFICE OF December 12, 2024
INSPECTOR GENERAL
MEMORANDUM FOR JESSICA MILANO, CHIEF PROGRAM OFFICER, OFFICE
OF CAPITAL ACCESS, DEPARTMENT OF THE TREASURY
FROM: Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT: Desk Review of the City of Fresno, California’s Use of
Coronavirus Relief Fund Proceeds (OIG-CA-25-013)
Please find the attached desk review memorandum 1 on City of Fresno, California’s
(Fresno) 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 reviewed documentation for a non-statistical
selection of 24 transactions reported in the quarterly Financial Progress Reports
(FPR) and identified unsupported questioned costs of $272,083 (see attached
schedule of monetary benefits).
Castro determined the expenditures related to the Contracts greater than or equal
to $50,000 and Aggregate Payments to Individuals2 payment types did not comply
with the CARES Act and Treasury’s Guidance. Castro also found that the Direct
Payments greater than or equal to $50,000 and Aggregate Reporting less than
$50,000 3 payment types complied with the CARES Act and Treasury’s Guidance.
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 grant-reporting portal on a quarterly
basis.
2 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the grant-reporting portal to prevent inappropriate
disclosure of personally identifiable information.
3 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
grant-reporting 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).
Page 2
Further, Castro identified reporting misclassification issues related to Contracts
greater than or equal to $50,000, which Castro considered to be non-compliant
with Treasury’s Guidance. Additionally, Fresno’s risk of unallowable use of funds
is moderate.
Castro recommends that the Department of the Treasury (Treasury) Office of
Inspector General (OIG) follow-up with Fresno’s management to confirm the
transactions noted as unsupported expenditures within the Contracts greater than
or equal to $50,000 and Aggregate Payments to Individuals payment types are
recouped or replaced by other eligible expenditures, not previously charged to
CRF, that were incurred during the period of performance. Based on Fresno’s
responsiveness to Treasury OIG’s requests and management’s ability to provide
sufficient documentation, Castro recommends Treasury OIG determine the
feasibility of conducting an audit for the Contracts greater than or equal to $50,000
and Aggregate Payments to Individuals payment types.
At the time of desk review fieldwork, Castro noted that Fresno had findings in
their Single Audit Act Reports for fiscal years 2020 and 2021. Castro recommends
that Treasury OIG follow-up with Treasury’s Office of Capital Access to ensure that
management decision letters are issued on the CRF specific findings identified by
the auditor in these Single Audit Act reports as summarized below:
• Fresno’s fiscal year 2020 Single Audit Act report was published on
September 21, 2021, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $625,188.
• Fresno’s fiscal year 2021 Single Audit Act report was published on
September 28, 2022, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $5,048,975.
• Fresno’s fiscal year 2022 Single Audit Act report was published on
March 15, 2023, and the auditor did not include any CRF related questioned
costs.
Castro recommends Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2020 and 2021 Single Audit Act reports. Castro also
recommends that Treasury OIG follow-up with Treasury’s Office of Capital Access
to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit Act reports.
Castro also identified matters throughout the course of the desk review, which
warrant recommendations to Treasury OIG for additional action. Castro made
recommendations related to the following issues:
1) Castro noted that Fresno awarded a total of $2,000,000 in CRF proceeds to the
Fresno Area Hispanic Foundation related to the Save Our Small Business Grant
Page 3
Program, including questioned costs of $40,000 in the Contracts greater than or
equal to 50,000 payment type. Since Castro identified unsupported questioned
costs within the Save Our Small Business Grant Program payments tested, Castro
recommends Treasury OIG determine the feasibility of performing additional
follow-up with Fresno to determine if there were other instances of unsupported
balances within the Save Our Small Business Grant Program; and
2) Castro noted that Fresno awarded a total of $1,792,356 in CRF proceeds for the
Central Valley Children Services Network Grant Program, including unsupported
questioned costs of $78,541 in the Contracts greater than or equal to $50,000
payment type. Since Castro identified unsupported questioned costs within
Central Valley Children Services Network Grant Program payments tested, Castro
recommends Treasury OIG determine the feasibility of performing additional
follow-up with Fresno to determine if there were other instances of unsupported
balances with the Central Valley Children Services Network Grant Program.
Treasury OIG and Castro met with Fresno’s management to discuss the report.
Fresno management stated that they would provide additional documentation to
Treasury OIG to support the questioned costs or replace them with other eligible
expenditures.
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 Fresno’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 Quality Standards for Federal Offices of Inspectors 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, Audit Director, at (202) 487-8371.
Page 4
cc:
Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital
Access, Department of the Treasury
Wayne Ference, Partner, Castro & Company, LLC
Courtney Espinoza, Business Manager, City of Fresno, California
Page 5
Attachment
Schedule of Monetary Benefits
According to the Code of Federal Regulations, 4 a questioned cost is a cost that is
questioned due to a finding:
(a) which resulted from a violation or possible violation of a statute,
regulation, or the terms and conditions of a Federal award, including for
funds used to match Federal funds;
(b) where the costs, at the time of the review, are not supported by
adequate documentation; or
(c) where the costs incurred appear unreasonable and do not reflect the
actions a prudent person would take in the circumstances.
Questioned costs are to be recorded in the Department of the Treasury’s
(Treasury) Joint Audit Management Enterprise System (JAMES). 5 The amount will
also be included in the Office of Inspector General (OIG) Semiannual Report to
Congress. It is Treasury management's responsibility to report to Congress on the
status of the agreed to recommendations with monetary benefits in accordance
with 5 USC 405.
Recommendation Questioned Costs
Recommendation No. 1 $272,083
The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $272,083 is
Fresno’s total expenditures reported in the grant-reporting portal that lacked
supporting documentation.
4
2 CFR § 200.84 – Questioned Cost
5
JAMES is Treasury’s audit recommendation tracking system.
1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com
Desk Review of the City of Fresno, California
December 12, 2024
OIG-CA-25-013
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the City of Fresno, California
On April 11, 2024, we initiated a desk review of the City of Fresno, California’s
(Fresno) 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 Fresno’s documentation supporting its uses of CRF proceeds as
reported in the GrantSolutions 2 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, 2022, 3 as reported in
the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed Fresno’s quarterly Financial Progress Reports (FPRs) submitted in
the GrantSolutions portal through September 30, 2022;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021; 4
1
P.L. 116-136 (March 27, 2020).
2
GrantSolutions, a grant and program management Federal shared service provider under the
United States (U.S.) Department of Health and Human Services, developed a customized and user-
friendly reporting solution to capture the use of CRF payments from prime recipients.
3
Fresno fully expended their total CRF proceeds as of September 30, 2022. Castro set the scope
end date to September 30, 2022, which was the date of Fresno’s last reporting submission within
the GrantSolutions portal.
4
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 the City of Fresno, California
3) reviewed Treasury’s Office of Inspector General (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping; 5
4) reviewed Treasury OIG’s monitoring checklists 6 of Fresno’s quarterly FPR
submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit Act reports, 7 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 Fresno’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, 8 and Treasury OIG Office of Counsel input on
issues that may pose risk or impact Fresno’s uses of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying
Fresno’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, Direct Payments, Aggregate
Reporting, 9 and Aggregate Payments to Individuals10 data identified
through GrantSolutions reporting; and
5
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.
6
The checklists were used by Treasury OIG personnel to monitor the progress of prime recipient
reporting in the GrantSolutions portal. GrantSolutions quarterly submission reviews were
designed to identify material omissions and significant errors, and where necessary, included
procedures for notifying prime recipients of misreported data for timely correction. Treasury OIG
followed the CRF Prime Recipient Quarterly GrantSolutions Submissions Monitoring and Review
Procedures Guide, OIG-CA-20-029R to monitor the prime recipients on a quarterly basis.
7
P. L. 104-156 (July 5, 1996) The Single Audit Act of 1984, as amended in 1996, requires entities
who receive federal funds in excess of $750,000 to undergo an annual audit of those Federal funds.
The act was enacted for the purpose of promoting sound financial management, including
effective internal controls, with respect to Federal awards administered by non-Federal entities and
to establish uniform requirements for audits. This prime recipient was subject to those audit
requirements, and Castro reviewed applicable prior year single audit reports as part of our desk
review risk assessment procedures.
8
Section 15010 of P.L. 116-136, the CARES Act, 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 15 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
Prime recipients were required to report CRF transactions greater than or equal to $50,000 in
detail in the GrantSolutions portal. Transactions less than $50,000 could 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, were
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 the City of Fresno, California
9) evaluated documentation and records used to support Fresno’s quarterly
FPRs.
Based on our review of Fresno’s documentation supporting the uses of its CRF
proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the Direct Payments greater than or equal to $50,000 and
Aggregate Reporting less than $50,000 payment types complied with the CARES
Act and Treasury’s Guidance. We also found that the Contracts greater than or
equal to $50,000 and Aggregate Payments to Individuals payment types did not
comply with the CARES Act and Treasury’s Guidance.
We identified unsupported questioned costs of $122,632 that resulted from our
testing of selected transactions. Also, as part of our desk review procedures
related to the Contracts greater than or equal to $50,000 payment type, Castro
identified additional unsupported questioned costs of $149,451 related to
reconciliation issues between Fresno’s general ledger and the GrantSolutions
portal, thus increasing our total questioned costs to $272,083. We also determined
Fresno’s risk of unallowable use of funds is moderate.
Castro recommends that Treasury OIG confirm the transactions noted as
unsupported expenditures within the Contracts greater than or equal to $50,000
and Aggregate Payments to Individuals payment types are recouped or replaced
by other eligible expenditures, not previously charged to CRF, that were incurred
during the period of performance. Based on Fresno management’s
responsiveness to Treasury OIG’s requests and their ability to provide sufficient
documentation, we recommend Treasury OIG determine the feasibility of
conducting an audit for Contracts greater than or equal to $50,000 and Aggregate
Payments to Individuals payment types.
At the time of our desk review fieldwork, Castro noted that Fresno had findings in
their Single Audit Reports for fiscal years 2020 and 2021. Castro recommends that
Treasury OIG follow-up with Treasury’s Office of Capital Access to ensure that
management decision letters are issued on the CRF specific findings identified by
the auditor in these Single Audit reports, which we have summarized below:
o Fresno’s fiscal year 2020 Single Audit report was published on
September 21, 2021, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $625,188.
o Fresno’s fiscal year 2021 Single Audit report was published on
September 28, 2022, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $5,048,975.
3
Desk Review of the City of Fresno, California
o Fresno’s fiscal year 2022 Single Audit report was published on
March 15, 2023, and the auditor did not include any CRF related questioned
costs.
We recommend Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2020 and 2021 Single Audit reports. We also
recommend that Treasury OIG follow-up with Treasury’s Office of Capital Access
to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit reports.
Non-Statistical Transaction Selection Methodology
Treasury issued a $92,755,913 CRF payment to Fresno. As of
September 30, 2022, Fresno had expended all of its CRF proceeds. Fresno’s
cumulative obligations and expenditures by payment type are summarized below.
Cumulative Cumulative
Payment Type Obligations Expenditures
Contracts >= $50,000 $ 26,665,516 $ 26,665,516
Grants >= $50,000 $ - $ -
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ - $ -
Direct Payments >= $50,000 $ 174,404 $ 174,404
Aggregate Reporting < $50,000 $ 6,561,763 $ 6,561,763
Aggregate Payments to
Individuals (in any amount) $ 59,354,230 $ 59,354,230
Totals $ 92,755,913 $ 92,755,913
Castro made a non-statistical selection of the Contracts greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting
less than $50,000, and Aggregate Payments to Individuals payment types.
Selections were made using auditor judgment based on information and risks
identified in reviewing audit reports, the GrantSolutions portal reporting
anomalies11 identified by the Treasury OIG CRF monitoring team, and review of
Fresno’s FPR submissions. Fresno did not obligate or expend CRF proceeds to the
Grants greater than or equal to $50,000, Loans greater than or equal to $50,000,
and Transfers12 greater than or equal to $50,000 payment types; therefore, we did
not make a selection of transactions from these payment types.
11
Treasury OIG had a pre-defined list of risk indicators that were triggered based on data
submitted by prime recipients in the FPR submissions that met certain criteria. Castro reviewed
these results provided by Treasury OIG for the prime recipient.
12
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 the City of Fresno, California
The number of transactions (24) we selected to test was based on Fresno’s total
CRF award amount and our overall risk assessment of Fresno. To allocate the
number of transactions (24) by payment type (Contracts greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting
less than $50,000, and Aggregate Payments to Individuals), we compared the
payment type dollar amounts as a percentage of cumulative expenditures as of
September 30, 2022. The transactions selected for testing were not selected
statistically, and therefore results could not be extrapolated to the total universe
of transactions.
Background
The CARES Act appropriated $150 billion to establish the CRF. Under the CRF,
Treasury made payments for specified uses to States and certain local
governments; the District of Columbia and U.S. Territories, including the
Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern Mariana Islands; and Tribal governments
(collectively referred to as “prime recipients”). Treasury issued a $92,755,913 CRF
payment to Fresno. The CARES Act stipulates that a prime recipient may only use
the funds to cover costs that—
(1) were 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 during the covered period between March 1, 2020 and
December 31, 2021. 13
13
P.L. 116-260 (December 27, 2020). The covered period end date of the CRF was extended through
December 31, 2021 by the Consolidated Appropriations Act, 2021. The covered period 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.
5
Desk Review of the City of Fresno, California
Section 15011 of the CARES Act required each covered recipient 14 to submit to
Treasury and the Pandemic Response Accountability Committee, no later than 10
days after the end of each calendar quarter, a report that contained (1) the total
amount of large covered funds 15,16 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) 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 the authority to recoup funds in the event that it is
determined a recipient failed to comply with requirements of subsection 601(d) of
the Social Security Act, as amended, (42 U.S.C. 801(d)).
Desk Review Results
Financial Progress Reports
We reviewed Fresno’s quarterly FPRs through September 30, 2022, and found that
Fresno timely filed quarterly FPRs in the GrantSolutions portal in compliance with
Treasury OIG’s reporting requirements for the periods ending June 30, 2020
through September 30, 2022.
Summary of Testing Results
We found that the Direct Payments greater than or equal to $50,000 and
Aggregate Reporting less than $50,000 payment types complied with the CARES
Act and Treasury’s Guidance. We also found that the Contracts greater than or
equal to $50,000 and Aggregate Payments to Individuals payment types did not
comply with the CARES Act and Treasury’s Guidance. The transactions selected
for testing were not selected statistically, and therefore results could not be
extrapolated to the total universe of transactions.
14
Section 15011 of P.L. 116-136, the CARES Act, defined a covered recipient as any entity that
received large, covered funds and included any State, the District of Columbia, and any territory or
possession of the United States.
15
Section 15010 of P.L. 116-136, the CARES Act, defined covered funds as any funds, including
loans, that were 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 made
appropriations for Coronavirus response and related activities.
16
Section 15011 of P.L. 116-136 defined large, covered funds as covered funds that amounted to
more than $150,000.
6
Desk Review of the City of Fresno, California
Within Table 1 below, we have included a summary of unsupported tested
expenditures identified as questioned costs, which did not comply with the CARES
Act and Treasury’s Guidance. See the Desk Review Results section below this
table for a detailed discussion of questioned costs and other issues identified
throughout the course of our desk review.
Table 1 - Summary of Expenditures Testing and Recommended Results
As of September 30, 2022
Cumulative Unsupported Ineligible
Expenditure Cumulative Tested Tested Total Tested
Population Expenditure Questioned Questioned Questioned
Payment Type
Amount Tested Amount Costs Costs Costs
Contracts >=
$50,000 $ 26,665,516 $ 7,128,614 $ 119,691 $ - $ 119,691
Grants >= $50,000
$ - $ - $ - $ - $ -
Loans >= $50,000
$ - $ - $ - $ - $ -
Transfers >=
$50,000 $ - $ - $ - $ - $ -
Direct Payments
>= $50,000 $ 174,404 $ 94,500 $ - $ - $ -
Aggregate
Reporting <
$50,000 $ 6,561,763 $ 22,430 $ - $ - $ -
Aggregate
Payments to
Individuals (in any
amount) $ 59,354,230 $ 17,730,644 $ 2,941 $ - $ 2,941
Totals $ 92,755,913 $ 24,976,188 $ 122,632 $ - $ 122,632
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Desk Review of the City of Fresno, California
Castro also identified other matters throughout the course of our desk review,
which we considered to be questioned costs, but which were not part of our
judgmental transaction selections. Table 2 below combines the tested questioned
costs identified in the table above with these other matters identified through our
desk review. We have included a “Total Unsupported Questioned Costs (Tested &
Other Matters)” column that summarizes the total amount of questioned costs
identified throughout the course of our desk review.
Table 2 - Summary of Tested and Other Matters Identified Questioned Costs
As of September 30, 2022
(C=A+B)
(A) (B) Total Unsupported
Unsupported Unsupported Questioned Costs
Questioned Costs Questioned Costs (Tested & Other
Payment Type (Tested) (Other Matters) Matters)
Contracts >= $50,000 $ 119,691 $ 149,451 $ 269,142
Grants >= $50,000 $ - $ - $ -
Loans >= $50,000 $ - $ - $ -
Transfers >= $50,000 $ - $ - $ -
Direct Payments >=
$50,000 $ - $ - $ -
Aggregate Reporting
< $50,000 $ - $ - $ -
Aggregate Payments
to Individuals (in any
amount) $ 2,941 $ - $ 2,941
Totals $ 122,632 $ 149,451 $ 272,083
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Desk Review of the City of Fresno, California
Contracts Greater Than or Equal to $50,000
We determined Fresno’s Contracts greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We tested nine transactions
totaling $7,128,614. During our general ledger to GrantSolutions portal
reconciliation process, we identified that of the $26,665,516 reported by Fresno in
the GrantSolutions portal for Contracts greater than or equal to $50,000,
$13,760,785 were for grants. We determined this reporting misclassification did
not comply with Treasury's Guidance. Of the $7,128,614 selected for testing,
$6,050,370 were related to contracts and $1,078,244 were related to grants.
The transactions tested included expenditures for the purchase of laptops and to
improve telework capabilities for remote workers during the pandemic; purchase
of property for vulnerable citizens moved into transitional housing; distribution of
grant assistance relief for small businesses due to service reduction and closures;
implementation of mobile clinics to provide COVID-19 testing in underserved
areas; installation of touchless restroom fixtures, physical changes to
accommodate social distancing, barriers for public counters, and signage;
vouchers issued to childcare centers for necessary COVID-19 related supplies; and
payroll costs of employees that worked to provide distribution to Fresno’s
underserved residents in need of food, supplies, and referrals during the COVID-
19 public health emergency. We identified exceptions related to three
transactions, which resulted in unsupported tested questioned costs totaling
$119,691, as detailed below.
Additionally, we identified an Other Matter for Treasury OIG consideration as
detailed below, that resulted in untested, unsupported questioned costs of
$149,451 for a grand total of unsupported questioned costs for Contracts greater
than or equal to $50,000 of $269,142.
Contract Exception #1 – Save Our Small Business Grant Program
Fresno awarded a $2,000,000 grant to the Fresno Area Hispanic Foundation, under
the Save Our Small Business Grant Program created to disburse funds to small
businesses that were adversely affected by business closures and service
reductions due to the pandemic. Of the $2,000,000 award amount, we tested
seven invoices totaling $91,883. We determined this transaction was a reporting
misclassification that did not comply with Treasury’s Guidance, as this program
was reported by Fresno as a Contract greater than or equal to $50,000, but should
have been reported as a Grant greater than or equal to $50,000 in the
GrantSolutions portal.
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Desk Review of the City of Fresno, California
For five invoices totaling $40,000 out of $91,883 tested, Fresno was unable to
provide adequate supporting documentation to evidence the small business
grants were eligible and allowable under the CARES Act and Treasury’s Guidance.
Fresno indicated that small business grant applicants attested to the figures
included in the application by signing the application and declaring that the
information provided was true and correct. We noted that the applicant guidelines
stated that businesses had to provide proof of at least a 10 percent loss of revenue
due to COVID-19; however, there was no indication that Fresno or the Fresno Area
Hispanic Foundation performed additional procedures to confirm the eligibility of
each applicant. Without adequate underlying documents, Castro was unable to
confirm the eligibility of the small business applicants awarded, resulting in
unsupported questioned costs of $40,000.
Castro noted that Fresno awarded the Fresno Area Hispanic Foundation a total of
$2,000,000 in CRF proceeds within the Save Our Small Business Grant Program,
including our reported Contracts greater than or equal to $50,000 unsupported
questioned costs of $40,000. Since Castro identified unsupported questioned costs
within the Save Our Small Business Grant Program payments tested, we
recommend Treasury OIG determine the feasibility of performing additional
follow-up with Fresno to determine if there were other instances of unsupported
balances within the Save Our Small Business Grant Program.
Contract Exception #2 - Central Valley Children Services Network Grant Program
Fresno awarded $1,792,356 to the Central Valley Children Services Network under
a grant program created to disburse economic support in the form of childcare
vouchers for essential workers and vulnerable populations in need of childcare
during the pandemic, as well as childcare centers to assist with purchasing
necessary COVID-19 supplies. We determined this was a reporting
misclassification that did not comply with Treasury’s Guidance, as this program
was reported by Fresno as a Contract greater than or equal to $50,000 but should
have been reported as a Grant greater than or equal to $50,000 in the
GrantSolutions portal.
Of the $1,792,356 award amount, we tested two transactions totaling $89,829.
Based on our review of the program criteria and required documents submitted
with the grant agreement, we requested that Fresno management provide
supporting documentation to substantiate that the expenditures incurred were
eligible expenditures. We noted that one of the childcare providers that received
grant funding as part of this program utilized $78,541 in CRF proceeds to purchase
personal protective equipment for the daycare center. Castro requested
supporting documentation such as purchase orders, invoices, receipt of goods,
and payment vouchers to justify the eligibility of the expenditures; however,
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Desk Review of the City of Fresno, California
Fresno was unable to provide any support. As a result, we determined Fresno did
not maintain adequate supporting documentation, resulting in unsupported
questioned costs of $78,541.
Castro noted that Fresno awarded a total of $1,792,356 in CRF proceeds related to
the Central Valley Children Services Network Grant Program, including our
reported Contracts greater than or equal to $50,000 unsupported questioned costs
of $78,541. Since Castro identified unsupported questioned costs within Central
Valley Children Services Network Grant Program payments tested, we
recommend Treasury OIG determine the feasibility of performing additional
follow-up with Fresno to determine if there were other instances of unsupported
balances with the Central Valley Children Services Network Grant Program.
During Castro’s review of the population provided for transaction selection related
to the Central Valley Children Services Network Grant Program, Castro noted that
the amount of grantee general ledger detail did not reconcile to the overall
amount of the grant award of $1,792,356, creating a variance of $432,248. In its
response to Castro’s request for the missing expenditure detail, Fresno provided
additional support totaling $282,798, but was unable to provide support for
$149,451. As a result, Castro determined that the variance amount of $149,451
was unsupported questioned costs.
Contract Exception #3 – Grant Program Related to a Food Distribution Program
Fresno awarded $125,000 to Reading and Beyond, a community-based
organization, under a grant to assist with food purchases and delivery to
vulnerable populations who could not shop or obtain food because of the risks
surrounding COVID-19. Reading and Beyond utilized the funds to provide food
assistance to the local community during the pandemic. We determined this was
a reporting misclassification that did not comply with Treasury’s Guidance, as this
program was reported by Fresno as a Contract greater than or equal to $50,000
but should have been reported as a Grant greater than or equal to $50,000 in the
GrantSolutions portal.
We tested $36,400 out of the $125,000 awarded to Reading and Beyond towards
the food assistance program. For one transaction valued at $16,400 related to
payroll costs for the food assistance program efforts of four employees, we
obtained and inspected paystubs, timesheets, payroll distribution reports, project
budgets, justifications, and payroll registers to reperform the payroll calculations
for the pay periods of October 1, 2020 through December 15, 2020. Castro noted
multiple time codes were used in the timesheets, including a direct COVID-19 time
code. Using the timesheets, we reperformed the calculation of the direct hours
charged to the COVID-19 time code and compared this to the total hours reported,
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Desk Review of the City of Fresno, California
which generated variances between the claimed payroll costs for three of the four
employees. Based on our recalculation, we determined $15,250 of the $16,400
tested was adequately supported based on the hours charged to the direct COVID-
19 time code. As a result, we identified unsupported questioned costs for the
remaining $1,150 without adequate support.
Direct Payments Greater Than or Equal to $50,000
We determined Fresno’s Direct Payments greater than or equal to $50,000
complied with the CARES Act and Treasury’s Guidance. We tested one direct
payment totaling $94,500 and identified no exceptions. The direct payment tested
included expenditures for the purchase of 30,000 masks for preventing the spread
of COVID-19 among city employees and the public.
Aggregate Reporting Less Than $50,000
We determined Fresno’s Aggregate Reporting less than $50,000 complied with the
CARES Act and Treasury’s Guidance. We tested one transaction totaling $22,430
and identified no exceptions. The transaction tested included translation services
for several languages such as Spanish, Punjabi and Hmong due to the COVID-19
public health emergency. Specifically, the services were needed to target
underserved communities to disseminate City of Fresno COVID-19 related
prevention and mitigation information.
Aggregate Payments to Individuals
CRF payments made to individuals, regardless of amount, were required to be
reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information. Castro notes that Aggregate
Payments to Individuals consisted of the following broad types of potential costs
which we have defined from Treasury’s guidance as published in the Federal
Register, 17 where applicable. Prime recipients may or may not have claimed all of
these types of expenditures.
17
CRF 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 the City of Fresno, California
Public Safety/Health Payroll 18 – consisted of payroll costs for public
health and safety department personnel.
Substantially Dedicated Payroll 19 – consisted of payroll costs for
non-public health and safety personnel who were substantially
dedicated to mitigating or responding to the COVID-19 public health
emergency.
Non-Substantially Dedicated Payroll 20 – consisted of payroll costs
for personnel who performed COVID-19 related tasks on a part-time
basis.
Non-Payroll Expenditures – consisted of financial assistance
payments to citizens due to hardship or loss of income,
unemployment claims, and other non-payroll related expenditures
made to individuals.
18
Treasury’s Federal Register guidance provided the following examples of public health and
safety employees: “police officers (including state police officers), sheriffs and deputy sheriffs,
firefighters, emergency medical responders, correctional and detention officers, and those who
directly support such employees such as dispatchers and supervisory personnel… employees
involved in providing medical and other health services to patients and supervisory personnel,
including medical staff assigned to schools, prisons, and other such institutions, and other support
services essential for patient care (e.g., laboratory technicians) as well as employees of public
health departments directly engaged in matters related to public health and related supervisory
personnel.”
19
Substantially dedicated payroll costs means that personnel must have dedicated over 50 percent
of their time to responding to or mitigating COVID-19. Treasury’s Federal Register guidance
indicates that: “The full amount of payroll and benefits expenses of substantially dedicated
employees may be covered using payments from the Fund. Treasury has not developed a precise
definition of what "substantially dedicated" means given that there is not a precise way to define
this term across different employment types. The relevant unit of government should maintain
documentation of the "substantially dedicated" conclusion with respect to its employees.”
20
Payroll costs that are not substantially dedicated means payroll costs that are not public health
and safety, and which are not substantially dedicated to performing COVID-19 related tasks.
Treasury’s Federal Register guidance defines more stringent tracking requirements for these types
of payroll costs. Specifically, the Federal Register states that agencies must: “track time spent by
employees related to COVID-19 and apply Fund payments on that basis but would need to do so
consistently within the relevant agency or department. This means, for example, that a
government could cover payroll expenses allocated on an hourly basis to employees' time
dedicated to mitigating or responding to the COVID-19 public health emergency.”
13
Desk Review of the City of Fresno, California
Fresno’s Aggregate Payments to Individuals balance consisted of payroll
transactions from the following categories of claimed costs.
Aggregate Payments to Individuals Category Total Expenses
Types 21 Claimed
Public Health and Safety Payroll $ 54,207,224
Substantially Dedicated Payroll $ 3,213,064
Non-Substantially Dedicated Payroll $ 1,933,942
Totals $ 59,354,230
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation, 22 and therefore, were subject to less
detailed documentation requirements. Castro tested public health and safety
payroll transactions by reviewing itemized payroll distribution reports to support
these balances. Substantially dedicated and non-substantially dedicated payroll
balances were not subject to this administrative accommodation, and therefore,
Castro tested these transactions by reviewing the prime recipient’s “substantially
dedicated" conclusion with respect to its employees and payroll distribution files,
and also by performing tests over specific employee timesheet submissions.
We determined Fresno’s Aggregate Payments to Individuals did not comply with
the CARES Act and Treasury’s Guidance. We tested 13 transactions totaling
$17,730,644. Of this amount, we tested $17,645,746 for public health and safety
payroll, $73,481 for substantially dedicated payroll, and $11,417 for non-
substantially dedicated payroll. We identified non-substantially dedicated payroll
related unsupported questioned costs from our testing totaling $2,941, as detailed
below.
21
Fresno did not report any non-payroll expenditures within its Aggregate Payments to Individuals
balance.
22
Treasury’s Federal Register guidance indicates that administrative accommodation means that
“In recognition of the particular importance of public health and public safety workers to State,
local, and tribal government responses to the public health emergency, Treasury has provided, as
an administrative accommodation, that a State, local, or tribal government may presume that
public health and public safety employees meet the substantially dedicated test…This means that,
if this presumption applies, work performed by such employees is considered to be a substantially
different use than accounted for in the most recently approved budget as of March 27, 2020. All
costs of such employees may be covered using payments from the Fund for services provided
during the period that begins on March 1, 2020, and ends on December 31, 2021.”
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Desk Review of the City of Fresno, California
Aggregate Payments to Individuals Exception – Non-Substantially Dedicated
Payroll
We tested one transaction totaling $4,706 claimed for non-substantially dedicated
payroll costs incurred by Fresno’s Emergency Operations Center (EOC) Director in
connection with the city planning and response to the COVID-19 pandemic. Fresno
management attested that the individual was crucial for the overall leadership and
coordination of the City’s COVID-19 response efforts and that the EOC team was
heavily involved in coordinating a response to the crisis.
Fresno utilized a specific time code to differentiate COVID-19 related time from
regular time. Fresno explained that the EOC Director’s payroll was reimbursed at
40 percent, which Fresno indicated was the average percent of the time the EOC
Director dedicated to COVID-19, but did not have formal documentation of this
determination. Fresno further elaborated that their reimbursement was based on
their calculation, which divided the average amount of total hours worked per pay
period by the average number of hours charged to the COVID-19 specific time
code per period. CRF eligibility criteria outlined in CRF Federal Register Vol. 86,
No. 10 Frequently Asked Questions (FAQ) A.47, states, "a State, local, or tribal
government may also track time spent by employees related to COVID-19 and
apply Fund payments on that basis but would need to do so consistently within
the relevant agency or department. This means, for example, that a government
could cover payroll expenses allocated on an hourly basis to employees' time
dedicated to mitigating or responding to the COVID-19 public health emergency."
Castro requested Fresno provide evidence that validated that the EOC Director
dedicated 40 percent of their time to COVID-19 specific tasks; however, Fresno
was unable to provide documentation that supported their reimbursement basis
of 40 percent as established during the covered period. As a result, we determined
that of the $4,706 amount tested, only $1,765 was properly supported based on
the hours charged to the COVID-19 specific time code. Fresno was unable to
provide sufficient documentation to support the full amount of payroll items
claimed within the GrantSolutions portal, resulting in unsupported questioned
costs of $2,941.
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Desk Review of the City of Fresno, California
Conclusion
We determined the expenditures related to the Contracts greater than or equal to
$50,000 and Aggregate Payments to Individuals payment types did not comply
with the CARES Act and Treasury’s Guidance. We also found that the Direct
Payments greater than or equal to $50,000 and Aggregate Reporting less than
$50,000 payment types complied with the CARES Act and Treasury’s Guidance.
We identified unsupported questioned costs of $122,632 that resulted from our
testing of selected transactions. Also, as part of our desk review procedures
related to the Contracts greater than or equal to $50,000 payment type, Castro
identified additional unsupported questioned costs of $149,451 related to
reconciliation issues between Fresno’s general ledger and the GrantSolutions
portal, thus increasing our total questioned costs to $272,083.
Further, we identified GrantSolutions portal misclassification reporting issues
related to Contracts greater than or equal to $50,000, which we considered to be
non-compliant with Treasury’s Guidance.
Additionally, Fresno’s risk of unallowable use of funds is moderate. As a result of
this desk review, we recommend Treasury OIG:
Confirm the transactions noted as unsupported expenditures within the
Contracts greater than or equal to $50,000 and Aggregate Payments to
Individuals payment types are recouped or replaced by other eligible
expenditures, not previously charged to CRF, that were incurred during
the period of performance. Based on Fresno management’s
responsiveness to Treasury OIG requests and their ability to provide
sufficient documentation, we recommend Treasury OIG determine the
feasibility of conducting an audit for the Contracts greater than or equal
to $50,000 and Aggregate Payments to Individuals payment types.
At the time of desk review fieldwork, Castro noted that Fresno had
findings in their Single Audit Reports for fiscal years 2020 and 2021.
Castro recommends that Treasury OIG follow-up with Treasury’s Office of
Capital Access to ensure that management decision letters are issued on
the CRF specific findings identified by the auditor in these Single Audit
reports, which we have summarized below:
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Desk Review of the City of Fresno, California
o Fresno’s fiscal year 2020 Single Audit report was published on
September 21, 2021, and the auditor determined unsupported
questioned costs specific to the CRF in the amount of $625,188.
o Fresno’s fiscal year 2021 Single Audit report was published on
September 28, 2022, and the auditor determined unsupported
questioned costs specific to the CRF in the amount of $5,048,975.
o Fresno’s fiscal year 2022 Single Audit report was published on
March 15, 2023, and the auditor did not include any CRF related
questioned costs.
We recommend Treasury OIG follow-up on any CRF specific questioned
costs reported in the fiscal year 2020 and 2021 Single Audit reports. We
also recommend that Treasury OIG follow-up with Treasury’s Office of
Capital Access to ensure that management decision letters are issued on
the CRF specific findings identified by the auditor in these Single Audit
reports.
Castro also identified other matters throughout the course of our desk review,
which warrant recommendations to Treasury OIG for additional action. Castro
made recommendations related to the following issues:
Castro noted that Fresno awarded a total of $2,000,000 in CRF proceeds
to the Fresno Area Hispanic Foundation related to the Save Our Small
Business Grant Program, including unsupported questioned costs of
$40,000 in the Contracts greater than 50,000 payment type. Since Castro
identified unsupported questioned costs within the Save Our Small
Business Grant Program payments tested, we recommend Treasury OIG
determine the feasibility of performing additional follow-up with Fresno
to determine if there were other instances of unsupported balances
within the Save Our Small Business Grant Program.
Castro noted that Fresno awarded a total of $1,792,356 in CRF proceeds
for the Central Valley Children Services Network Grant Program,
including unsupported questioned costs of $78,541 in the Contracts
greater than $50,000 payment type. Since Castro identified unsupported
questioned costs within Central Valley Children Services Network Grant
Program payments tested, we recommend Treasury OIG determine the
feasibility of performing additional follow-up with Fresno to determine if
there were other instances of unsupported balances with the Central
Valley Children Services Network Grant Program.
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Desk Review of the City of Fresno, California
*****
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. 23 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
23
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
18