Weed and Seed Initiative Grant, City of Wichita Falls, Texas
Audit Report GR-80-05-007
Office of the Inspector General
The Office of the Inspector General, Audit Division, completed an audit of Weed and Seed Program Grant Number 2002-WS-QX-0073, awarded by the U.S. Department of Justice, Office of Justice Programs (OJP), to the City of Wichita Falls, Texas (City). The Weed and Seed strategy brings together federal, state, and local crime-fighting agencies, social services, prosecutors, business owners, and neighborhood residents under the shared goal of weeding out violent crime and gang activity, while seeding in social services and economic revitalization.
Four fundamental principles that underlie the Weed and Seed strategy include collaboration, coordination, community participation, and leveraging resources. The Weed and Seed program is a comprehensive response to crime and neighborhood deterioration. The program includes a multi-level strategic plan that includes four basic components:
Law enforcement and community policing represent the “weeding” aspect of the strategy. Prevention, intervention, treatment, and neighborhood restoration represent the “seeding” components.
The Department of Justice’s Community Capacity Development Office has overall responsibility for the Weed and Seed Program, including grant management, technical assistance, training programs, and resources to support local Weed and Seed strategies.1
The Steering Committee is the primary work force in the Weed and Seed program. Often chaired by a U.S. Attorney, the Steering Committee is responsible for establishing Weed and Seed goals and objectives, designing and developing programs, providing guidance on implementation, and assessing program achievement.
U.S. Attorneys serve as both the main contact to Weed and Seed sites and the facilitator of the program’s community-based coordination efforts. The U.S. Attorney coordinates federal, state, and local law enforcement and prosecutorial activities as well as oversight of the Weed and Seed strategy.
Between January 1, 2002, and December 31, 2003, the City was awarded an initial grant of $225,000 and a supplemental grant of $225,000, for a total of $450,000. The grant was awarded to help communities with serious crime problems bring together people and resources to prevent and control crime and improve the quality of life in neighborhoods. The Weed and Seed strategy aims to prevent, control, and reduce violent crime, drug abuse, and gang activity in designated high-crime neighborhoods across the country.
We conducted our initial field work during the week of February 17, 2004, and conducted a preliminary exit conference with City officials, the Weed and Seed coordinator, and a Steering Committee representative on April 14, 2004. We also communicated our preliminary results to the U.S. Attorneys Office for the Northern District of Texas on May 21, 2004.
Although we received a management representation letter, dated April 14, 2004, we were not able to apply selected auditing procedures during the first phase of our audit to satisfy ourselves that grant funds were spent in accordance with grant terms and conditions. Therefore, on July 26, 2004, we requested that the City provide all supporting documentation for each drawdown since the inception of the grant, including activity for each subrecipient, through June 30, 2004. We gave the City 60 days to respond to our request. On September 24, 2004, we received their response and began testing for the second phase of the audit.
As part of the overall audit, we tested the City’s compliance with five essential grant conditions — reporting, grant drawdowns, budget management and control, grant expenditures, and monitoring of subrecipients. We found weaknesses in each area tested.
We also tested the City’s accounting records to determine if reimbursements for costs under the grants were allowable, supported, and in accordance with applicable laws, regulations, guidelines, and terms and conditions of the grant. As a result of our overall testing, we question a total of $205,000 that is described in greater detail below.2
Financial Status and Program Reporting
All seven Financial Status Reports (FSRs) were submitted within the required 45 days. However, four of the seven FSRs contained errors, and none of the four reconciled to the drawdowns.
The City submitted four Program Reports to OJP during the scope of our audit. One Program Report was submitted 13 days late during the first semiannual reporting period for 2002. Further, the City did not accurately convey grant activity as reflected in the semiannual Program Reports. Equally important, the City was unable to provide supporting documentation that contained the activities being described within the Program Reports.
One drawdown revealed that reimbursements exceeded expenses by $3,454 during the third quarter of 2003. In addition, the City’s accounting records did not always agree with the affiliated drawdown activity. We discovered two exceptions revealing revenue and expenditure activity that did not agree with the drawdown report. City officials were unable to provide a reasonable explanation for these exceptions.
We found that the City received $1,442 in excess of expenses incurred during the second quarter of 2004. Furthermore, the City’s accounting records reflected current expenditure and revenue activity for an inactive account. The accounting reports revealed several transactions posted to an account that did not have an affiliation with the current grant award.
Budget Management and Control
The City disbursed $23,507 for personnel and fringe benefits in excess of the approved budget categories. In addition, the City reallocated funds among approved budget categories that exceeded the 10 percent limit by $6,409. According to the OJP Financial Guide, a change in approved budget categories is allowed up to 10 percent of the total award amount as last approved by the awarding agency provided there is no change in project scope. Prior approval from the awarding agency is required before exceeding the 10 percent limit.
We found several transactions were inaccurately recorded, unauthorized, and incorrectly charged to the grant. The City also lacked adequate internal controls to ensure that grant funds were properly administered. They also did not enforce a monthly reconciliation cutoff period for balancing purposes.
Furthermore, the City did not adequately track equipment purchased with federal funds and disbursed $73,220 without evidence of valid written agreements with subrecipients.
During our testing of transactions, we found several reimbursements that were unallowable and unsupported. As a result, we question $192,803 in grant funds received and recommend $12,769 in funds be put to better use.
Monitoring of Subrecipients
The City had not established adequate policies and procedures for monitoring subrecipients, which included monitoring activities, verification of audit requirements, and applicable corrective action plans. In addition, they did not have a mechanism in place for monitoring the amounts reimbursed to each subrecipient. As a result, expenditures reimbursed to each subrecipient exceeded approved budgets by $26,472.
Potential Conflicts of Interest
Our audit discovered that multiple conflicts of interest may exist. The issues have been referred to the Department for further inquiry.
Our report contains 18 recommendations. They are discussed in detail in the Findings and Recommendations section of the report. A list of subrecipients affiliated with the Weed and Seed grant and their related questioned costs are shown in Appendix III, and a chart disclosing all questioned costs by City account category is Appendix IV.
We discussed the results of our audit with City officials and the U.S. Attorneys Office for the Northern District of Texas. We included their comments in the report, where applicable.