Sneak Preview: Monitoring Deemed Lacking in CDFI Fund Program

Jerry Ashworth
June 25, 2020 at 15:34:20 ET
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(The following was excerpted from a recent article in the Single Audit Information Service.) While the Department of the Treasury already sends automated reminders to community development financial institutions (CDFIs) receiving assistance under the CDFI Fund Technical Assistance Award program addressing the submission of delinquent reports, the Treasury Office of Inspector General (OIG), in a recent audit, urged the office to revise its standard operating procedures (SOPs) to enable departmental staff to follow-up directly with CDFIs who receive these notifications.

The Riegle Community Development and Regulatory Improvement Act (Pub. L. 103-352) established the CDFI Fund to promote economic revitalization and community development through financial assistance to CDFIs in the form of grants, loans, equity and other investments. The CDFI Fund offers two types of grants — technical assistance awards and financial assistance awards. Technical assistance awards are intended to build the capacity of an existing certified CDFI or an entity seeking to become certified as a CDFI, and may be used for compensation, personnel services and fringe benefits, professional services, travel, training and education, equipment and supplies. Treasury’s Certification, Compliance Monitoring and Evaluation (CCME) staff oversee the program.

OIG’s audit reviewed all 315 CDFI technical assistance awards totaling about $26 million made to 269 entities from federal fiscal year (FY) 2006 through FY 2012 to assess whether awardees met CDFI certification requirements and whether CCME was monitoring the program effectively to ensure recipients complied with their assistance agreements.

During the audit period reviewed, an entity seeking certification was required to be certified within two years after receiving the technical assistance award or the date specified in the recipient’s assistance agreement, and certifications were generally effective for three years. To become certified, entities submitted a CDFI certification application (separate from its grant award application) and were required to: (1) be a legal financing entity; (2) have a primary mission of promoting community development; (3) provide development services along with financing activities; (4) serve one or more target markets; (5) maintain accountability to its defined target market(s); and (6) be a nongovernment entity and not under the control of any government entity.

(The full version of this story has now been made available to all for a limited time here.)

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