Report 2014-037 Recommendation 5 Responses

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

Recommendation #5 To: Housing and Community Development, Department of

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

- Develop a thorough process to track and monitor advances.

1-Year Agency Response

The DFA CalHome program has updated their desk manual (pg 55) to specifically require documented justification by senior management on waivers to the policy. Per CSA, this type of documentation would resolve their concern. This issue is fully implemented.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

DFA BEGIN updated the Desk Manual to include the policy and process for tracking fund advancements (Attachment AF5a, red text).

CalHome produced a Management Memo (AF5b-1) outlining its advanced funds policy. The memo was provided to all active award recipients. CalHome updated its desk manual with staff instructions on documenting draw requests (AF5b-2, red text).

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although HCD updated its policies to include a process to track and monitor advances for its BEGIN and CalHome programs, those policies allow the CalHome program manager to waive its advance policy at his or her discretion, increasing the risk that HCD will experience the same problems with advances we found in our report.

60-Day Agency Response

DFA staff and management are currently evaluating the process to track advanced funds. The evaluation involves a more efficient coordination through the HCD Admin Division, to reconcile and improve accuracy of data and determine any amounts outstanding.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2014-037

Agency responses received are posted verbatim.