Richmond audit report reveals budget department has yet to establish oversight over city grants

RICHMOND, Va. (WRIC) -- A quarterly audit report from the city of Richmond shows that its budget department has failed to establish a centralized grant management, sub-recipient oversight and monitoring function for the city -- despite city auditors telling it to do so years ago.

During a previous audit, Richmond's Office of the City Auditor (OCA) discovered multiple issues with how the Budget Department handles the city's grants.

The audit report was first issued on April 26, 2022, with applied changes due by June, 1 2023. However, the audit remains open and those changes have yet to be implemented by the Budget Department.

These unimplemented changes are considered a "high priority recommendation" -- or a recommended change that addresses "critical issues that are occurring that pose significant risks to the organization, including significant internal control weaknesses, non-compliance with laws and regulations, financial losses, fraud and costly or detrimental operational inefficiencies."

What did city auditors recommend?

City auditors found that grants were being "poorly" administered to ensure compliance, which includes obtaining required reports and expenditures that are "allowable and adequately supported."

Per OCA, the scope of grant contracts clearly defines the duties, responsibilities and expectations of the recipient of the grant and that all copies of fully executed contracts are to be maintained.

Auditors also recommended that grant contracts identify the funds that their recipients can retain for administrative, operational and unrestricted expenses.

Lastly, city staff charged with grant management and sub-recipient oversight are to receive proper training and assistance in identifying grant opportunities for city departments.

The most recent quarterly audit report from OCA revealed that, at the beginning of Fiscal Year 2025, 139 total audit recommendations remained outstanding across 16 city departments -- with almost all of them (128) past their original target completion dates.

Since the last quarterly report, OCA has issued 9 new recommendations.

According to OCA, during this most recent review period, it received communications from under half of the departments with open recommendations.

"After reviewing the submitted documentation, 10 recommendations were closed," OCA said. "Of the recommendations closed, four were high priority, three were medium priority and three were low priority."