New York State Claimed Unallowable Community Services Block Grant Recovery Act Costs for Action for a Better Community, Inc.

Of the $1.3 million in Community Services Block Grant (CSBG) Recovery Act costs that the New York State Department of State (the State) claimed on behalf of Action for a Better Community, Inc. (ABC) and that we reviewed, $478,000 was allowable under the terms of the grant award and applicable Federal requirements. However, the State claimed $796,000 in unallowable costs on behalf of ABC. ABC charged these unallowable costs because its internal controls were not adequate to ensure that CSBG costs complied with Federal regulations. In addition, the State's procedures for monitoring ABC were not sufficient to identify certain deficiencies related to personnel activity reporting.

We recommended that the State (1) refund the Federal Government $796,000 for unallowable costs, (2) ensure that ABC improves its internal controls to ensure that its CSBG costs comply with Federal regulations, and (3) revise its procedures for monitoring to ensure ABC complies with Federal regulations on personnel activity reporting. ABC and the State generally disagreed with our findings and recommendations.