HUD OIG reviewed the FERA for the Community Development Block Grant Recovery (CDBG-R) grant to determine whether the FERA complied with OMB’s updated guidance for ARRA, as well as HUD’s streamlined assessment process. OIG’s review of the final FERA for the program determined that except for one noncompliance issue and some minor inconsistency errors, HUD’s final FERA for CDBG-R adequately identified program risk, identified in-place and planned risk mitigation techniques, and adequately described the rationale for the final risk ratings for the 11 factors assessed. Further, the FERA adequately emphasized the major program objectives of timeliness, clear and measurable objectives, transparency, monitoring, and reporting. As a result, OIG made no recommendations. (Audit Report: 2009-FW-0802)
HUD OIG reviewed the City of Bethlehem, PA’s community planning and development program. On March 6, 2009, HUD awarded the City $1.1 million under ARRA for its community planning and development program. OMB directed inspectors general to perform audits to ensure that funds provided under ARRA are used for their intended purposes. The objective was to determine whether the City had the capacity to effectively administer its community planning and development funds provided under ARRA according to applicable requirements.
The City had the capacity to effectively administer community planning and development funds provided to it under ARRA according to the applicable requirements. It had adequate internal control procedures pertaining to accounting controls, staffing levels, personnel operating policies, monitoring of subrecipients, procurement of goods and services, and establishment of program guidelines that complied with HUD requirements. A recent HUD OIG audit and other reviews disclosed no major problems with the City’s program. The City is planning to use its ARRA funds on eligible activities that meet the objectives of the programs and ARRA.
Since OIG did not identify any deficiencies, there are no recommendations. (Audit Report: 2009-PH-1801)
The City of Fort Worth, TX, is scheduled to receive $10.85 million in ARRA funding. HUD OIG issued a memorandum on the City’s capacity to administer these funds.
The City had a history of failing to meet regulatory requirements in an efficient or timely manner. It needs to strengthen its capacity to adequately administer recovery funding to include improving its procurement activities and undertaking only prudent projects.
OIG recommended that HUD place special conditions on the City’s grants, requiring the correction of past deficiencies and including plans to monitor the additional funding, thereby ensuring better use of more than $4.5 million. (Audit Report: 2009-FW-1802)
HUD OIG reviewed Adams County, CO, to evaluate the County’s capacity to administer its ARRA funds. The County will receive more than $1.3 million in ARRA funding to carry out its Homelessness Prevention and Rapid Re-Housing Program (HPRP) and provide additional funding to its CDBG program.
OIG found weaknesses that could significantly affect the County’s capacity to administer these funds and recommended that HUD require corrective action on the deficiencies. (Audit Report: 2009-DE-1801)
HUD OIG audited the Municipality of Rio Grande, PR’s CDBG program to determine whether the Municipality complied with HUD regulations, procedures, and instructions related to the administration of the CDBG program and whether the Municipality had the capacity to administer additional funds allocated under ARRA.
The Municipality awarded 110 contracts totaling more than $1 million without following HUD and local procurement requirements. As a result, it could not ensure that quality goods and services were obtained at the most advantageous terms. In addition, it did not support the reasonableness of more than $1 million in CDBG contracts.
The Municipality’s financial management system did not fully comply with applicable HUD requirements. It (1) did not support the allowability of more than $57,000 in program disbursements; (2) could not support the allocability of more than $218,000 in administrative costs charged to the CDBG program; and (3) did not maintain accurate, current, and complete accounting records.
The Municipality’s management controls over its housing rehabilitation activities were inadequate. The Municipality (1) improperly used CDBG funds for deficient housing rehabilitation work and new housing construction and (2) did not provide assistance to correct health and safety hazards. Therefore, the related program funds of more than $20,000 were ineligible, and more than $7,000 is considered unsupported pending an eligibility determination by HUD.
The Municipality lacked sufficient capacity to administer additional funds allocated under ARRA. It had not developed and implemented adequate controls to ensure compliance with HUD financial management
systems requirements and the purposes of ARRA. As a result, HUD lacked assurance that ARRA funds would be adequately accounted for, safeguarded, and used for authorized purposes and in accordance with ARRA and HUD requirements.
OIG recommended that HUD require the Municipality to repay the ineligible expenditures. HUD should also require the Municipality to provide all supporting documentation showing the reasonableness and eligibility of the CDBG contracts and more than $276,000 in CDBG disbursements. OIG also recommended that HUD require the Municipality to develop and implement an internal control plan to ensure that the CDBG program has (1) procurement procedures which ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition, (2) a financial management system that complies with HUD requirements, (3) controls and procedures which ensure that the housing rehabilitation activities meet the program objectives, and (4) policies and procedures to ensure that ARRA funds are effectively and efficiently used and in accordance with applicable requirements. In addition, OIG recommended that HUD increase monitoring of the Municipality’s performance in the administration of its CDBG and ARRA funds. (Audit Report: 2009-AT-1012)
HUD OIG reviewed the City of Altoona, PA, to determine whether the City had adequate capacity and controls to administer its ARRA funds. The City will receive $1.3 million in ARRA funds to carry out CDBG and HPRP activities.
The City needs to strengthen its capacity and controls to effectively administer funds provided to it under ARRA. OIG recommended that (1) HUD require the City to implement controls to ensure that ARRA activities are supported and meet eligibility requirements and (2) the City update its written monitoring procedures for all subrecipients to ensure accountability and transparency of ARRA funds, evaluate its staffing, and consider hiring additional staff to administer the funds. (Audit Report: 2009-PH-1802)
HUD OIG reviewed the City of Aurora, CO, to evaluate the City’s capacity to administer more than $1.6 million in ARRA funds that it will receive to carry out its HPRP and perform additional activities under its CDBG program. OIG did not find evidence to indicate that the City lacked the capacity to adequately administer its ARRA funding and, therefore, made no recommendations. (Audit Report: 2009-DE-1802)