Stronger Management of Grants Ensures Better Stewardship of Resources
Published on May 06, 2021
DENVER – Managers at Denver’s airport have taken steps to ensure better stewardship of resources through improved grant management policies, according to a follow-up audit from Denver Auditor Timothy M. O’Brien, CPA.
“By starting work for grant-funded projects on time, using more flexible funds early, or getting approval to start early, the airport greatly reduces the risk of losing hundreds of thousands of dollars in grant funding that would otherwise have to be covered by the airport’s own public funds,” Auditor O’Brien said.
The airport faced that exact scenario after our 2019 audit report. We found $2.81 million dollars in grant funding reimbursed by the FAA was unallowable because they were spent outside the allowed time frame. The FAA made the airport pay back more than $750,000 of that money.
At the time of follow-up, we found airport management now has a procedure requiring the senior vice president of financial accounting to make sure funds are billed under the correct period if the airport is asking the FAA to reimburse them.
However, the new policy requires officials to use entitlement funds and airport match funds first to avoid using discretionary funds, which are time-sensitive, earlier than they should. This will not work when there are no funds available except the time-sensitive ones.
That’s why it is important for the airport to receive advanced, written approval from the FAA to use funds early. Airport officials disagreed with this recommendation in the original audit, but the audit team found evidence the airport is moving in this direction anyway.
“Every funding source matters, especially as we work to recover from the COVID-19 pandemic,” Auditor O’Brien said. “By ensuring the process uses proper checks and controls, the airport will be in a much stronger position to finish projects using all available money.”
A final remaining risk involves late requests for reimbursement from the FAA. The airport disagreed with our recommendation to request reimbursements in a timely manner. Airport officials did get a waiver for a conflicting city fiscal rule, but the exemption still has not been added to the airport’s official grant policy.
“The timeliness of grant management — whether it’s timing for the start of the project or late reporting and requests for reimbursement — is a common issue we have seen in several audits of grant management,” Auditor O’Brien said. “By following the timelines and rules for grants, city agencies can avoid the risk of losing or having to repay funding.”
Airport officials fully implemented our recommendation to regularly review grant policies and procedures and now do so annually.
Read the Follow Up Report(PDF, 1MB)
Read the Audit(PDF, 5MB)
AUDITOR TIMOTHY O'BRIEN, CPA
Denver Auditor's Office
201 W. Colfax Ave. #705 Denver, CO 80202
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