Audit: Denver exposed to fraud, errors with federal COVID pandemic relief

The City of Denver remains exposed to potential errors and undetected fraud associated with the federal COVID-19 pandemic relief funds. This follows recommendations from last year's audit of the $126.9 million. 

The Denver Auditor released a follow-up report to the initial audit about the coronavirus relief funds. 

"We saw huge amounts of money coming into the city from the federal government and going out the door just as quickly," Auditor O'Brien said in a statement. "There was a high risk of errors, misuse, or even potential fraud, and I hoped to see quick implementation of our recommendations to ensure strong stewardship of emergency resources."

According to the 2021 audit, the city was doing a good job managing the funds from the Coronavirus Relief Fund created by Congress through the Coronavirus Aid, Relief, and Economic Security, or CARES, Act.

The audit also flagged gaps the Department of Finance needed to fix as it prepared to take in more federal funds to help with the city's ongoing pandemic response. 

"By still not adequately accounting for interest, the city risks forfeiting additional valuable aid it could otherwise use to help the Denver community as our residents continue recovering from the pandemic," Auditor O'Brien said in a statement. "I hope the Department of Finance will continue working to fill in these crucial gaps in its process." 

The auditor also stated that the Dept. of Finance "still has not sufficiently cross-trained its staff, and it does not yet have sufficient policies to ensure staff reconciles bank accounts each month - and that supervisors then verify that those bank reconciliations actually happen."

O'Brien also stated that the Dept. of  Finance committed to implementing all recommendations from the original audit by September 2021 and that four of those recommendations had not been implemented more than 6 months later. 

"While I'm pleased the city is offering better guidance on documentation, implementing only one recommendation is not good enough considering the high risks and high-dollar amounts involved with pandemic relief funding," Auditor O'Brien said.

Money from the Coronavirus Relief Fund was used to support food assistance, public health efforts, economic support, and individual support. The largest amount was planned to pay for shelter and housing. 

The communications director for Denver's Department of Finance, Courtney Meihls, provided a statement to CBS4:

"We appreciate the Auditor's diligence in ensuring our internal processes are efficient and effective, and for their acknowledgement in the original audit report that the 'Department of Finance sufficiently managed these funds'. We are confident that we are strong stewards of the city's emergency resources and that, the Coronavirus Relief Funds (CRF) were never at risk. We made great strides in implementing the recommendations from the 2021 audit report and look forward to connecting with the Auditor's Office to better understand how to fully communicate the steps we took and the processes we developed in response to their recommendations."