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ARRA Audit Reports

Issue Date: March 3, 2011
Audit Report No.: 2011-BO-1006

Title: The New Bedford Housing Authority, New Bedford, MA, Generally Administered Its Public Housing Capital Fund Stimulus Formula and Competitive Grants (Recovery Act Funded) in Accordance With Applicable Requirements

We audited the New Bedford Housing Authority’s (Authority) $9.9 million of the Public Housing Capital Fund Stimulus Formula and Competitive Grants (Recovery Act Funded).    Our objective was to determine whether the Authority obligated and disbursed capital funds received under the Recovery Act according to the requirements of the act and applicable U.S. Department of Housing and Urban Development (HUD) rules and regulations.

The Authority generally administered its grants according to Recovery Act requirements and applicable HUD rules and regulations. This report does not contain recommendations and no further action is necessary with respect to our report.

Issue Date: February 8, 2011
Audit Report No.: 2011-LA-1007

Title: Allegations of Lutheran Social Services of Northern California’s Misuse of Homelessness Prevention and Rapid Re-Housing Program Funds Were Unsubstantiated

We audited Lutheran Social Services of Northern California (auditee) in response to a hotline complaint.  The complaint alleged that the auditee misused Homelessness Prevention and Rapid Re-Housing Program (HPRP) funds.  The specific allegations included (1) ineligible purchases using employee credit cards, (2) unreasonable rental of storage units, (3) caseworkers qualifying family and friends for HPRP who were not eligible, (4) diversion of HPRP funds, and (5) forged documents for check disbursements from the auditee’s Sacramento office.  Our audit found that these allegations of misuse of HPRP funds were unsubstantiated.


Issue Date: January 31, 2011
Audit Report No.: 2011-PH-1006

Title: The City of Pittsburgh, PA, Can Improve Its Administration of Its Community Development Block Grant Recovery Act Funds

On July 17, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the City a $4.5 million grant of Community Development Block Grant funds under the Recovery Act.  The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes.  The HUD Office of inspector General (OIG) conducted the audit to determine whether the City administered its street resurfacing and neighborhood business and economic development activities funded with Recovery Act funds according to the requirements of the Recovery Act and applicable HUD rules and regulations.  The OIG concluded that although the City generally administered its street resurfacing and neighborhood business and economic development activities funded with Recovery Act funds according to the requirements of the Recovery Act and applicable HUD rules and regulations, it can improve its administration of the funds.  The City (1) did not comply with HUD guidance for implementing the “buy American” provision of the Recovery Act, (2) could not demonstrate that jobs created in part by $400,000 in loaned funds benefitted or will benefit low- and moderate-income persons, (3) did not include a statement of work in its subrecipient agreement with the Urban Redevelopment Authority (Redevelopment Authority), and (4) did not accurately enter the number of jobs created or retained into the Federal reporting Web site.  The OIG recommended that HUD require the City to (1) develop and implement controls to ensure that a “buy American” provision is included in requests for applications or proposals, subrecipient agreements, bidding documents, and contracts funded with Recovery Act funds; (2) provide documentation to demonstrate that $400,000 loaned to two companies will comply with national objective criteria and benefit low- and moderate-income persons; (3) amend its subrecipient agreement with the Redevelopment Authority to include a specific description of the work to be performed, a schedule for completing the work, and a detailed budget; and (4) develop and implement controls to ensure that Recovery Act job creation data it enters into the Federal reporting Web site are accurate.


Issue Date: January 25, 2011
Audit Report No.: 2011-FW-1005

Title: The Housing Authority of the City of Port Arthur, TX, Mismanaged Its Recovery Act Funding

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act), we audited the Housing Authority of the City of Port Arthur’s (Authority) Public Housing Capital Fund Stimulus (formula) Recovery Act Funded activities.  We wanted to determine whether (1) Public Housing Capital Fund formula grant obligations made between January 30 and March 17, 2010, were appropriate, prudent, eligible, and supported and (2) related procurements were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and Recovery Act requirements.  Additionally, we assessed the Authority’s compliance with Recovery Act reporting and environmental review requirements.

We found the Authority’s Recovery Act obligation was not appropriate, prudent, eligible, and supported because its related procurement was not made in accordance with 24 CFR Part 85 and Recovery Act requirements.  The Authority violated procurement requirements designed to ensure full and open competition and reasonable cost and did not practice sound financial controls over the grant.  As a result, the Authority’s obligation of its $725,546 Recovery Act grant and its resulting expenditures were ineligible.  In addition, the Authority did not comply with Recovery Act environmental review reporting requirements and it commenced site work for its project before receiving environmental clearance to proceed. 

We recommend that the U. S. Department of Housing and Urban Development (HUD) rescind the Authority’s Recovery Act grant, including the $67,640 expended, and return the entire $725,546 allocation to the U. S. Treasury for the sole purpose of deficit reduction.  HUD should also ensure that the Authority complies with procurement requirements, adopts adequate financial controls, and complies with environmental review requirements.  We further recommend that HUD prohibit the Authority from conducting further site work until it receives environmental clearance to do so, regardless of the funding source.


Issue Date: January 19, 2011
Audit Report No.: 2011-SE-1002

Title: Washington State Housing Finance Commission, Seattle, WA, Did not Always Disburse Its Tax Credit Assistance Program Funds in Accordance With Program Requirements

The U. S. Department of Housing and Urban Development, Office of Inspector General, audited the Washington State Housing Finance Commission (the Commission) to determine whether the Commission established eligible grant projects, reported tax credit assistance program (TCAP) information into Recovery.gov accurately and completely, and paid eligible TCAP expenditures in accordance with American Recovery and Reinvestment Act of 2009 requirements.  The Commission complied with the applicable Recovery Act and HUD rules and regulations in establishing eligible grant projects, and in the reporting of TCAP information in FederalReporting.gov.  However, the Commission did not always disburse TCAP funds in accordance with program requirements.  The Commission reimbursed two project owners for ineligible permanent loan fees, appraisal fees and unsupported legal costs.  We recommended that HUD require the Commission to reimburse $170,036 to its U.S. Treasury line of credit from non-Federal funds for the ineligible expenditures.  We also recommend HUD require the Commission to provide supporting documentation for $17,068 in unsupported costs or reimburse its U.S. Treasury line of credit from non-Federal funds.  Further, we recommend that HUD require the Commission to establish and implement written policies and procedures for the review and approval of budgets and draw requests.


Issue Date: January 5, 2011
Audit Report No.: 2011-FW-1004

Title: The West Memphis, AR, Housing Authority Generally Administered Its Recovery Act Funding in Compliance With Requirements

We audited the West Memphis Housing Authority (Authority) in Arkansas as part of our annual audit plan to review American Reinvestment and Recovery Act (Recovery Act).  Our objective was to determine whether obligations the Authority made between January 30 and March 17, 2010, were appropriate, prudent, eligible, and supported, whether procurements and disbursements were made in accordance with requirements. 

Generally, the Authority complied with Recovery Act requirements regarding the obligation of capital funds, including complying with procurement requirements.  However, it did not comply with all requirements and could strengthen its controls.  The instances of noncompliance appeared to have been oversights by the Authority. 

We recommended actions to correct the over-obligations and strengthen controls.


Issue Date: January 4, 2011
Audit Report No.: 2011-AO-1003

Title: The Housing Authority of East Baton Rouge Parish, Baton Rouge, LA, Generally Ensured That It Met HUD and the Recovery Act Requirements but Incurred an Ineligible Expenditure

We audited the Housing Authority of East Baton Rouge Parish's (Authority) American Recovery and Reinvestment Act of 2009 (Recovery Act) Public Housing Capital Fund obligations. Our audit objective was to determine whether the Authority met HUD and Recovery Act requirements when obligating and expending funds it received under the Recovery Act. We initiated the audit as part of our audit plan and goal to review funds provided under the Recovery Act.

Overall, the Authority generally ensured that it met HUD and Recovery Act requirements. Specifically, it obligated Recovery Act capital funds for eligible projects, maintained proper support for its obligations, and ensured that it had adequate management controls over its obligation process. In addition, the Authority's Recovery Act projects were in progress, and it appeared that the Authority would spend its Recovery Act funds within the required timeframes. However, it did not always ensure that Recovery Act expenditures were eligible. This condition occurred because the Authority wanted to exhaust all of its Recovery Act funds before charging expenditures to its regular capital funds and it had not developed adequate written accounting policies and procedures. As a result, the Authority spent $13,561 for ineligible costs.

The Authority corrected the transaction which generated the $13,561 of ineligible costs, and charged it to the appropriate funding source. However, we recommend that HUD's Director of Public Housing require the Authority to develop and implement adequate written accounting policies, which include procedures for processing and paying invoices, to ensure that Recovery Act funds are properly spent and accounted for.


Issue Date: December 21, 2010
Audit Report No.: 2011-LA-1005

Title: The City and County of San Francisco, CA, Did Not Always Ensure That Homelessness Prevention and Rapid Re-Housing Funds Were Used as Required

We audited the City and County of San Francisco (City) because its grant of more than $8.7 million was one of the largest Homelessness Prevention and Rapid Re-Housing Program (HPRP) grants in the State of California.  Our objective was to determine whether the City disbursed HPRP funding in accordance with program requirements.  The City paid for HPRP services for ineligible participants and participants whose eligibility was not supported. It also paid for ineligible activities.  We reviewed 31 case files and found that 4 participants were ineligible and 10 did not have adequate documentation to support eligibility.  We also identified 17 additional participants that the City had reviewed during monitoring whose eligibility was not adequately supported.  Thus, we questioned the City’s use of more than $63,000 in HPRP funds.

We recommend that HUD require the City to (1) reimburse the program $8,820 from non-Federal funds for the ineligible participants and activities and determine and reimburse any amounts that have been spent since our review for these participants; (2) provide supporting documentation for participants’ eligibility or reimburse its program accounts $31,172 for participants reviewed who lacked adequate documentation and determine and reimburse any amounts that have been spent since our review for these participants; (3) provide supporting documentation for participants’ eligibility or reimburse its program accounts $23,016 based on the City’s monitoring review and determine and reimburse any amounts that have been spent since our review for these participants; (4) develop and implement procedures to ensure that its subgrantees verify and document participant eligibility in accordance with HPRP requirements; and (5) develop and implement effective monitoring procedures to ensure, at a minimum, that reviews are timely, deficiencies and corrections are clearly documented, and any reimbursements for ineligible participants or participants whose eligibility cannot be determined are repaid to the program.


Issue Date: December 17, 2010
Audit Report No.: 2011-BO-1003

Title: The Housing Authority of the City of New Haven, CT, Did Not Support Cost Reasonableness for More Than $1.4 Million or Properly Obligate $60,000 of Its Capital Fund Stimulus Recovery Act Grant

We selected the Housing Authority of the City of New Haven (Authority), a Moving to Work agency, because it obligated a majority of its $6 million in Public Housing Capital Fund Stimulus (formula) Recovery Act Funded grant (grant) received under the American Recovery and Reinvestment Act of 2009 (Recovery Act) just before the required obligation deadline. Our objectives were to determine whether the Authority (1) obligated its Recovery Act formula funds for eligible projects/activities, (2) properly supported obligations and expenditures, (3) had adequate controls over obligations and expenditures, and (4) procured contracts in accordance with Recovery Act requirements and U.S. Department of Housing and Urban Development (HUD) rules and regulations. 

Overall, the Authority obligated its Recovery Act formula funds for eligible activities, supported its obligations, and had adequate controls over the obligation and expenditure process.  However, it did not always procure contracts in accordance with Recovery Act and Federal requirements that involved more than $1.4 million of its $6 million in Recovery Act funds. 

Specifically, the Authority could not show cost reasonableness for more than $1.4 million in vacancy reduction contracts primarily because it did not complete an independent cost estimate before solicitation and failed to complete a formal cost or price analysis of the bids.  In addition, the Authority did not obtain competitive bids for the renovations.  This condition occurred because the Authority did not follow HUD’s and its own procurement policies and procedures regarding the Recovery Act funds.  As a result, Recovery Act funds may not have been used efficiently, and the maximum number of vacant housing units may not have been returned to service.

The Authority also did not properly obligate and execute its Recovery Act physical needs assessment contract.  The contract was not properly obligated because it included a $60,000, contingency for additional work that may have required expenditure; thus, the Authority was not obligated to spend Recovery Act funds.  The contract was not properly executed because the Authority used the contingency for a study that was not included in the contract scope of work and, thus, was not an eligible contract cost.  This condition occurred because the Authority did not ensure that costs identified for funding with the $60,000, represented an eligible cost under the contract.  If this situation is not corrected, $60,000, may be spent for ineligible activities, and funds may be recaptured in accordance with the Recovery Act.

 We recommend that the Director of HUD’s Boston Office of Public Housing require the Authority to support the cost reasonableness or repay any amounts it cannot support from the more than $1.4 million in Recovery Act capital funds spent for vacancy reduction contracts.  We also recommend that the Authority improve its procurement controls to include obtaining appropriate procurement training and fully implementing procurement requirements regarding cost estimates, cost analysis, and competitive bids. We recommend that HUD require the Authority to pay for the Section 8 conversion study, assigned under task order one, from non-Recovery Act funds.  Lastly, we recommend that the Director of HUD’s Boston Office of Public Housing ensure that the $60,000 is expended according to the contract; however, if eligible costs cannot be identified, the $60,000 should be recaptured in accordance with the Recovery Act.


Issue Date: November 8, 2010
Audit Report No.: 2011-PH-1003

Title: The Pennsylvania Housing Finance Agency, Harrisburg, PA, Generally Administered Its Tax Credit Assistance Program Funded Under the Recovery Act in Accordance With Applicable Requirements

On June 26, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the Agency $95.1 million in tax credit assistance program (program) funds under the Recovery Act.  The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes.  The HUD Office of Inspector General (OIG) conducted the audit to determine whether the Agency administered its program in accordance with Recovery Act and applicable HUD requirements.  The OIG concluded that the Agency generally administered its program in accordance with Recovery Act and HUD requirements.  However, the Agency incurred ineligible costs totaling $135,590 and could not support costs totaling $151,936.  In addition, it did not obtain required lobbying certifications from contractors and subcontractors, and it understated its job creation information that it reported to the Federal reporting Web site.  The OIG recommended that the Agency reimburse its Program $135,590 for the ineligible costs identified by the audit and provide documentation to support $151,936 in unsupported costs identified by the audit or reimburse its Program from non-Federal funds for any costs that it cannot support.  In addition, the Agency should obtain the required lobbying certifications from contractors and subcontractors and develop and implement controls to ensure that accurate job information is reported on the Federal reporting Web site.


Issue Date: November 4, 2010
Audit Report No.: 2011-LA-1002

Title: The Housing Authority of the City of Los Angeles Generally Had Capacity; However, It Needs To Improve Controls Over Its Administration of Its Capital Fund Grant Awarded Under The Recovery Act Program

We completed a capacity review of the Housing Authority of the City of Los Angeles’ (Authority) capital fund grant awarded under the American Recovery and Reinvestment Act of 2009 (Recovery Act) program.  We performed the audit because Recovery Act reviews are part of the Office of Inspector General’s (OIG) annual plan and the Authority was awarded a significant amount of program funds.  Our objective was to evaluate the Authority’s capacity in the areas of internal controls, eligibility, financial controls, procurement, and output/outcomes in administering its Recovery Act funds.  We determined that the Authority generally had adequate capacity to manage and administer its Recovery Act funding.  However, we identified various weaknesses that could impact the Authority’s ability to effectively manage and administer its Recovery Act funding in the most economical and efficient manner.  Specifically it (1) did not properly procure two of its contracts or evaluate compliance with requirements for a third contract, (2) failed to include all provisions required by 24 CFR (Code of Federal Regulations) 85.36(i) for five of its contracts, (3) did not record its employees’ time accurately and consistently in its manual and Oracle time cards, (4) did not develop sufficient written policies and procedures to monitor for Davis-Bacon compliance, and (5) did not maintain documentation to show that Davis-Bacon certified payrolls were received and reviewed for compliance.

We recommend that the Director of the Los Angeles Office of Public Housing (1) require the Authority to provide support showing the eligibility and reasonableness of $369,259 disbursed for the repair of 12 fire-damaged units at Nickerson Gardens or reimburse this amount to its Recovery Act program, as appropriate, from non-Federal funds, (2) closely monitor the intergovernmental purchasing agreement transactions of the Authority for the quarters ending December 31, 2010, March 31, 2011, and June 30, 2011 to ensure that it follows the U.S. Department of Housing & Urban Development’s (HUD) and its own procurement requirements, (3) implement procedures to ensure that it includes all mandatory contract provisions as required by 24 CFR 85.36(i), (4) rescind the Authority’s HA-2006-047 Home Depot contract and require it to re-bid it out in compliance with 24 CFR 85.36(c) and its own internal procurement policy, and (5) monitor the Authority to ensure that it implements the procedures it has in place to establish project numbers before beginning work at each development.  We also recommend that the Director of the Los Angeles Office of Public Housing require the Authority to (1) reallocate the payroll of force account employees in the Oracle system to the correct project numbers between September 12, 2009, and February 12, 2010, and (2) develop and implement formal written policies and procedures to assist staff in monitoring for Davis-Bacon compliance.


Issue Date: November 2, 2010
Audit Report No.: 2011-BO-1001

Title: The Cambridge, MA, Housing Authority Generally Administered Its Public Housing Capital Fund Stimulus (Formula) Recovery Act Funded Grant in Accordance With Applicable Requirements

We audited the Cambridge Housing Authority (Authority) because it obligated a majority of its $4.4 million Public Housing Capital Fund Stimulus (Formula) Recovery Act Funded grant (grant) received under the American Recovery and Reinvestment Act of 2009 just before the required obligation deadline.  Our objective was to determine whether the Authority obligated and disbursed capital funds received under the Recovery Act according to the requirements of the act and applicable U.S. Department of Housing and Urban Development (HUD) rules and regulations.

The Authority generally administered its grant according to Recovery Act requirements by obligating and disbursing its capital funds according to applicable HUD rules and regulations. This report does not contain recommendations.


Issue Date: October 25, 2010
Audit Report No.: 2011-PH-1001

Title: The Virginia Housing Development Authority, Richmond, VA, Generally Administered Its Tax Credit Assistance Program Funded Under the Recovery Act in Accordance With Applicable Requirements

On July 17, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the Authority $44.2 million in tax credit assistance program (program) funds under the Recovery Act.  The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes.  The HUD Office of Inspector General (OIG) conducted the audit to determine whether the Authority administered its program in accordance with Recovery Act and applicable HUD requirements.  The OIG concluded that the Authority generally administered its program in accordance with Recovery Act and HUD requirements.  However, the Authority did not obtain lobbying certifications as required by the Recovery Act.  The OIG recommended that the Authority obtain lobbying certifications from its program contractors and subcontractors.   It took immediate corrective action during the audit to obtain the required certifications.


Issue Date: October 25, 2010
Audit Report No.: 2011-LA-1001

Title: The City of Los Angeles Housing Department, Los Angeles, CA, Did Not Always Effectively Administer Its Homelessness Prevention and Rapid Re-Housing Program

We audited the Homelessness Prevention and Rapid Re-Housing Program (program) at the City of Los Angeles Housing Department (Department) because it was the second largest single program grant awarded within California under the American Recovery and Reinvestment Act of 2009 (Recovery Act).  In addition, our audit is part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) national mandate to monitor grant activities funded by the Recovery Act.  Our objective was to determine whether the Department was efficiently and effectively administering the grant funds in compliance with Recovery Act and other applicable requirements.  Specifically, we wanted to determine whether the Department had adequate policies and procedures in place to ensure that program expenditures were supported with adequate documentation and subrecipients were monitored to ensure compliance with all applicable regulations.  We found that the Department did not always efficiently and effectively administer the grant funds in compliance with the Recovery Act and other applicable requirements.  It did not ensure that expenditures were supported with adequate source documentation.  Further, its policies and procedures were not adequate to ensure that its subrecipients complied with contractual requirements, maintained source documents for program expenditures, and received adequate monitoring for compliance with Federal requirements.

We recommend that HUD require the Department to revise its policies and procedures to ensure that adequate source documentation is reviewed before disbursing program funds.  We also recommend that HUD require the Department to enforce the Homeless Program services contract between itself and the Los Angeles Homeless Services Authority (Authority) to ensure that the Authority collects, reviews, and maintains adequate source documentation from all of its subrecipients, thereby reducing the risk of fraud, waste, and abuse.  Further, we recommend that the Department revise its policies and procedures to ensure that the day-to-day activities of all subrecipients are monitored during the grant term to ensure compliance with Homelessness Prevention and Rapid Re-Housing Program requirements and other applicable Federal requirements.


Issue Date: October 14, 2010
Audit Report No.: 2011-FW-1001

Title: The Housing Authority of the City of Shreveport, LA, Mismanaged Its Recovery Act Funds by Entering into Imprudent Contracts to Meet the Obligation Deadline

We audited the Housing Authority of the City of Shreveport (Authority) as part of our annual audit plan to review American Recovery and Reinvestment Act of 2009 (Recovery Act) funds. Our objective was to determine whether obligations the Authority made between January 30 and March 17, 2010, were appropriate, prudent, eligible, and supported and whether procurements were made in accordance with requirements. We determined that the Authority mismanaged its Recovery Act funds by entering into imprudent contracts to meet the March 17, 2010 obligation deadline. In addition, the Authority could not provide assurance that the contracts were properly awarded or managed. By selecting an activity for expediency purposes instead of prioritizing capital work in its best interest, the Authority inefficiently and ineffectively managed more than $1.5 million in Recovery Act funding. We recommended that HUD require the Authority to deobligate more than $1.1 million in Recovery Act funds and that it recapture and rescind the deobligated funds and deposit those funds with the U. S. Treasury in accordance with the Recovery Act, as amended.


Issue Date: September 30, 2010
Audit Report No.: 2010-KC-1009

Title: The Omaha, Nebraska Housing Authority Did Not Comply With Recovery Act Requirements When Reporting on Recovery Act Capital Funds

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Omaha Nebraska Housing Authority (Authority) to determine whether the Authority (1) obligated Recovery Act grant funds in accordance with Recovery Act requirements and applicable U.S. Department of Housing and Urban Development (HUD) rules, (2) expended Recovery Act grant funds in accordance with Recovery Act requirements and applicable HUD rules, and (3) accurately and completely reported the Recovery Act grant information to Recovery.gov.  The Omaha, Nebraska Housing Authority generally obligated and expended Recovery Act grant funds in accordance with Recovery Act requirements, but it did not accurately or completely report Recovery Act grant information to Recovery.gov.  We recommended that HUD require the Authority to obtain training for its staff and management on requirements for reporting to Recovery.gov.


Issue Date: September 27, 2010
Audit Report No.: 2010-BO-1010

Title: The Boston, MA, Housing Authority Generally Administered Its Capital Fund Recovery Grant as Required

We audited the Boston, MA, Housing Authority (Authority) because it was awarded more than $33 million in Capital Fund Recovery Grant funds under the American Recovery and Reinvestment Act of 2009 (Recovery Act) and obligated the majority of the grant shortly before the required obligation deadline.  Our objectives were to determine whether the Authority (1) obligated the capital fund grant funds it received under the Recovery Act for eligible projects, (2) properly supported obligations, and (3) had adequate management controls governing its obligation process. 

Overall, the Authority generally obligated capital funds for eligible projects, maintained proper support for the obligations related to the Capital Fund Recovery Grant, and had adequate management controls governing its obligation process. The Authority also administered its grant in accordance with requirements, and its accounting department maintained proper support and tracking of obligations for more than $33 million in Recovery Act capital funds.  The Authority's Recovery Act initiatives were well underway, and it appeared to be able to expend funding within the timeframe requirements of the Recovery Act.

This report contains no recommendations, and no further action is necessary.


Issue Date: September 24, 2010
Audit Report No.: 2010-DE-1007

Title: The Housing Authority of the County of Salt Lake, UT, Properly Expended Its Recovery Act Capital Grant Funds, But Did Not Properly Obligate All Its Funds

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General,  We reviewed the Housing Authority of the County of Salt Lake’s (Authority) Public Housing Capital Fund Stimulus (formula) Recovery Act Funded grant (grant) based on a risk assessment we completed and the results of a monitoring review performed by the Denver Office of Public Housing.  The objective was to determine whether the Authority properly obligated and expended its formula grant funds.  The Authority did not properly obligate more than $500,000 of its grant funds.  The Authority obligated the funds without executing contracts for the planned improvements.  However, it generally expended more than $600,000 of its formula grant funds properly.


Issue Date: September 21, 2010
Audit Report No.: 2010-BO-1009

Title: The Manchester Housing Authority in Manchester, CT, Obligated Its Recovery Act Grant Funds in a Timely Manner for Eligible Projects and Properly Supported Expenditures

We audited the Manchester Housing Authority (Authority) in Manchester, CT, because it obligated the majority of its $520,654 Public Housing Capital Fund Stimulus (Formula) Recovery Act Funded grant awarded under the American Recovery and Reinvestment Act of 2009 (Recovery Act) just before the required obligation deadline.  Our objectives were to determine whether the Authority (1) obligated its grant funds in a timely manner for eligible projects, (2) maintained support for its obligations and expenditures, and (3) had adequate management controls over its obligation process.

The Authority obligated its Recovery Act funds in a timely manner for eligible projects and maintained the proper support for its obligations and expenditures.  Its management controls over its obligation process were adequate and allowed the Authority to obligate $459,996 of the $520,654 grant for nine separate projects, with the remaining funds being obligated for administration and other fees.

We did not identify any deficiencies, and, therefore, there are no recommendations in this report.


Issue Date: September 20, 2010
Audit Report No.: 2010-PH-1013

Title: Housing Authority of Baltimore City, MD, Generally Administered Its Recovery Act Capital Fund Grants in Accordance With Applicable Requirements

On March 18, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the Authority a $32.7 million formula grant under the Recovery Act for its public housing capital fund program.  It also awarded the Authority $33.3 million in competitive grants in September 2009.  The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes.  The HUD Office of inspector General (OIG) conducted the audit to determine whether the Authority administered capital funds provided under the Recovery Act according to the requirements of the Recovery Act and applicable HUD rules and regulations.  The OIG concluded that the Authority generally administered its grant funds in accordance with the requirements of the Recovery Act and applicable HUD rules and regulations.  The OIG recommended that HUD require the Authority to properly record a $19,000 transaction on its books, strengthen controls for maintaining documentation to support cell phone expenditures and recording transactions in its general ledger, and track the performance of its energy conservation program, report performance annually, and identify funds it will use to repay the funds it borrowed to implement energy conservation measures if the projected savings from implementing the measures are not realized. 


Issue Date: September 17, 2010
Audit Report No.: 2010-DP-0003

Title: Review of the Effectiveness of HUD’s Data Quality Review Processes for the American Recovery and Reinvestment Act of 2009

We audited HUD’s internal control structure for ensuring that American Recovery and Reinvestment Act of 2009 (Recovery Act) recipient data are reported completely, accurately, and in a timely manner.  We also determined whether material omissions and significant errors were identified correctly.  We conducted this audit as part of a joint effort among the Inspector General community under oversight of the Recovery Accountability and Transparency Board. 

HUD established the Recovery Implementation Team (Recovery Team), within the Office of Strategic Planning and Management, to monitor and maintain Recovery Act funding and reporting.  The Recovery Team’s accomplishments as of the March 31, 2010, reporting period are as follows: (1) Developed policies and procedures for validating recipient reporting, (2) Completed several rounds of validation checks of recipient data, (3) Successfully assisted approximately 99 percent of the prime recipients (4,849 of 4,911) to meet report requirements, and (4) Met with the Office of Inspector General (OIG) on a monthly basis to discuss Recovery Act activities. 

The overall quality assurance process completed by the Recovery Team has proven to be successful with HUD’s high recipient reporting rate.  However, we determined that the Recovery Team should provide additional and updated guidance to HUD program offices pertaining to enforcement actions for non reporting.  In accordance with Office of Management and Budget Memorandum 10-17, Federal agencies have additional requirements to ensure that recipients report in a timely manner.  The Recovery Team needs to ensure that program offices have implemented this new memorandum and request updated enforcement action procedures from the program offices.


Issue Date: September 17, 2010
Audit Report No.: 2010-DE-1005

Title: The Housing Authority of the City of Pueblo, CO, Generally Followed Recovery Act Rules and Regulations When Obligating and Expending its Recovery Act Capital Funds, But Did Not Accurately Report Recovery Act Funded Jobs

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General,  reviewed the Housing Authority of the City of Pueblo, CO (Authority), based on our risk assessment considering the amount of American Recovery and Reinvestment Act of 2009 (Recovery Act) capital funds it received and expended along with other evaluative factors. The objectives of our review were to determine whether the Authority obligated and expended its Housing Capital Fund Stimulus (Formula) Recovery Act Funded grant funds (Recovery Act capital funds) in accordance with Recovery Act rules and regulations and whether it properly reported Recovery Act information in federalreporting.gov.  The Authority generally followed Recovery Act rules and regulations when obligating and expending its Recovery Act capital funds.  However, it did not accurately report in federalreporting.gov the number of jobs created and the number of jobs retained using its Recovery Act capital funds.


Issue Date: September 10, 2010
Audit Report No.: 2010-KC-1007

Title: The Missouri Housing Development Commission Did Not Always Obtain Required Documents and Properly Report on the Tax Credit Assistance Program Funded Under the Recovery Act

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited the Missouri Housing Development Commission’s (Commission) Recovery Act funded Tax Credit Assistance Program (TCAP).  Our audit objectives were to determine whether the Commission obtained wage reports and lobbying certifications required by Federal law and accurately reported job creation to Recovery.gov.  We concluded that the Commission did not obtain and review all Davis-Bacon Act reports and lobbying certifications from contractors working on TCAP-funded projects.   In addition, it did not accurately report job creation data to Recovery.gov.  We recommend that HUD require the Commission to design and implement a system for identifying contractors working during the month on TCAP-funded projects and tracking the receipt of required documentation.  In addition, the Commission should obtain and review the required lobbying certifications and Davis-Bacon Act files that are missing.  Additionally, we recommend that HUD require the Commission to restate its fourth quarter 2009 and first quarter 2010 job creation figures in its administrative files.  Also, the Commission should restate its second quarter jobs creation figures to Recovery.gov during the continuous correction period and establish an adequate system for reviewing the job creation reports to ensure proper reporting in future quarters.


Issue Date: August 31, 2010
Audit Report No.: 2010-SE-1001

Title: Washington State Did Not Disburse Its Homelessness Prevention and Rapid Re-Housing Funds in Accordance With Program Requirements

The U.S. Department of Housing and Urban Development, Office of the Inspector General, audited the Washington State Department of Commerce (State).  Our audit objective was to determine whether the State disbursed Homelessness Prevention and Rapid Re-Housing Program (HPRP) grant in accordance with American Recovery and Reinvestment Act of 2009 requirements.  The State paid for HPRP services for ineligible participants and participants whose eligibility was not supported.  In addition, the State made a duplicate payment to one of its subgrantees for HPRP.  We recommended that HUD require the State reimburse its HPRP $3,435 from non-Federal funds for one ineligible participant and either provide supporting documentation for the participants lacking adequate documentation or reimburse its program $166,785 from non-Federal funds for those affected participants.  We also recommended that HUD require the State reimburse its HPRP $7,034 from non-Federal funds for the duplicate payment to its subgrantee.


Issue Date: August 6, 2010
Audit Memorandum No.: 2010-HA-0801

Title: HUD’s Guidance on Posting Signs for American Recovery and Reinvestment Act Projects

In response to a request from the Recovery Accountability and Transparency Board (Board), we performed a review of the U. S. Department of Housing and Urban Development's (HUD) guidance to the American Recovery and Reinvestment Act (Recovery Act) recipients to post signs, logos, and emblems intended to publicly identify the expenditure of Recovery Act or "stimulus" funds. The Board was asked by Congressman Darrell Issa, ranking member of the Committee on Oversight and Government Reform, to determine the scope and impact of the Obama Administration's guidance to recipients on what he stated was politicized stimulus advertising. The Board in turn asked us to respond to a series of inquiries regarding such advertising as it pertained to HUD's Recovery Act programs. Congressman Issa characterized HUD's stimulus advertising as the most overtly political guidance that "provided recipients a suggested sign template informing the public that projects have been funded by American Recovery and Reinvestment Act, Barack Obama, President."

Our objective was to determine whether HUD required or encouraged its Recovery Act recipients to post signs to publicly identify projects that were funded with stimulus funds. We concluded that for two programs, HUD initially included provisions in the grant agreements requiring posting of signs. HUD subsequently issued agency-wide guidance that "encouraged" Recovery Act recipients to post signs.


Issue Date: August 5, 2010
Audit Report No.: 2010-CH-1011

Title: The State of Illinois Needs To Improve Its Capacity To Effectively and Efficiently Administer Its Neighborhood Stabilization Program

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the State of Illinois’ (State) Neighborhood Stabilization Program (Program). The audit was part of the activities in our fiscal year 2010 annual audit plan. We selected the State based upon citizens’ complaints to our office. Our objectives were to determine whether the State (1) had the capacity to effectively and efficiently administer its Program and obligate Program funds before the required 18-month obligation deadline, (2) awarded Program funds for eligible projects, and (3) used Program funds for eligible administrative costs.

The State needs to improve its capacity to effectively and efficiently administer its Program. Although the Illinois Housing Development Authority (Authority), the current administrator of the State’s Program, had sufficient staffing levels and extensive experience with HUD programs, it is at risk of not meeting the required 18-month obligation deadline for Program funds. Further, the Illinois Department of Human Services (Department), the former administrator of the State’s Program, allocated more than $4.8 million in Program funds for a project that did not comply with HUD’s and Federal requirements for maintaining sufficient documentation to support the use of nearly $8,000 in Program funds for administrative expenses. As a result, a significant portion of the State’s nearly $20.9 million in unobligated Program funds is at risk of being recaptured by HUD and not being used to stabilize neighborhoods and stem the decline in value of neighboring homes in the State, and HUD lacked assurance that the State used nearly $8,000 in Program funds for eligible Program administrative costs.

We informed the Authority’s executive director and the Director of HUD’s Chicago Office of Community Planning and Development of a minor deficiency through a memorandum, dated August 4, 2010.

We recommend that the Director of HUD’s Chicago Office of Community Planning and Development require the State to (1) implement adequate procedures and controls to ensure that it obligates its Program funds for eligible projects before September 4, 2010; (2) implement the Authority’s Program reallocation award plan (plan) for the more than $4.8 million in Program funds available after the Authority rescinded one of the Department’s allocations for a project; (3) provide sufficient supporting documentation or reimburse its Program from non-Federal funds, as appropriate, for the nearly $8,000 in Program funds used for unsupported administrative costs; and (4) implement adequate procedures and controls to address the finding cited in this report.


Issue Date: July 27, 2010
Audit Report No.: 2010-CH-1010

Title: The Housing Authority of the City of Terre Haute, IN, Substantially Mismanaged Its Capital Fund Program and Lacked Capacity To Adequately Administer Its Recovery Act Funds

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General (OIG) audited the Housing Authority of the City of Terre Haute, IN’s (Authority) Public Housing Capital Fund program (program). We selected the Authority based on our audits of its nonprofit development activities (see OIG audit report #2009-CH-1011, issued July 2009) and as part of OIG’s initiative to evaluate public housing authorities’ capacity to administer the capital funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Our audit objectives were to determine whether the Authority (1) properly administered its program and (2) had the capacity to administer its Recovery Act funds.

Under the direction of the former executive director, the Authority violated its annual contributions contract (contract) with HUD when it obtained a $2.3 million construction loan and a $2 million line of credit to finance capital improvements without HUD approval. Further, the Authority did not follow HUD’s and its own procurement requirements and failed to pay its maintenance staff and a contractor the appropriate Federal labor standard wage rates as required by the Davis-Bacon Act. The Authority obligated its Recovery Act funds in a timely manner. However, it lacked adequate written policies and procedures and staff knowledgeable of HUD’s and other Federal procurement requirements. Therefore, it lacked sufficient capacity to expend the funds. As a result, the Authority encumbered $2.3 million of its project assets, and HUD lacked assurance that it (1) used more than $1.4 million in program funds for their intended purposes, (2) operated its program in an efficient manner, and (3) had the capability to effectively expend its Recovery Act funding. Further, the Authority owed more than $49,000 in wage restitution.

We recommend that the Acting Director of HUD’s Cleveland Office of Public Housing require the Authority to (1) provide documentation of HUD’s approval of the construction loan, (2) reimburse HUD nearly $800,000 for the interest incurred on the loan from 2000 to 2007 and reimburse its project more than $70,000 for interest incurred on the loan after 2007 from non-Federal funds, (3) provide documentation showing that HUD approved the line of credit and the use of program funds for reimbursement of previously incurred expenses, (4) reimburse its program $129,872 from non-Federal funds for the interest paid on the line of credit, (5) reimburse its current and/or former maintenance employees and contractor $49,532 from non-Federal funds for wage restitution, and (6) implement adequate procedures and controls to address the findings cited in this audit report.

We also recommend that HUD’s Acting Director

  • Inform the Acting Deputy Assistant Secretary for Field Operations of the Authority’s actions, which may result in a substantial default of its contract.
  • Consult with HUD’s Office of General Counsel to determine whether the construction loan encumbered and/or pledged the Authority’s project assets. If the loan only encumbered the assets, a determination is needed to conclude whether the loan can be retroactively approved. If the loan cannot be approved, the Authority should be required to reimburse its program more than $1.6 million and its project more than $800,000 from non-Federal funds.
  • Consult with HUD’s Office of General Counsel to determine the appropriateness of the Authority’s using its fiscal year 2008 program funds to pay for the line of credit expenses that were previously incurred. If the use of the funds was not appropriate and should not be retroactively approved, the Authority should reimburse its program more than $1.4 million from non-Federal funds for its fiscal year 2008 program award.
  • Acquire capacity to manage its Recovery Act and other similar funding, including, but not limited to, staff persons knowledgeable in Federal procurement requirements or contracting for this expertise, developing specific procedures for financial reporting, management controls, and procurement.
  • Incorporate the applicable recommendations cited in this audit report into the Authority’s memorandum of agreement with HUD.

Further, we recommend that HUD’s Acting Director, in conjunction with the Director of HUD’s Departmental Enforcement Center, pursue the appropriate administrative sanction(s) against the Authority’s former executive director for failing to enforce HUD’s requirements. We also recommend that HUD’s Associate General Counsel for Program Enforcement determine legal sufficiency and if legally sufficient, pursue remedies under the Program Fraud and Civil Remedies Act against the Authority’s former board chairperson/principals for incorrectly certifying that the information contained in the Authority’s annual plans was true and accurate when it was not.


Issue Date: July 27, 2010
Audit Report No.: 2010-AT-1007

Title: The Housing Authority, City of Wilson, NC, Lacked the Capacity To Effectively Administer Recovery Act Funds

We reviewed the Housing Authority of the City of Wilson (Authority) because it was granted $9.2 million for Public Housing Capital Fund projects (capital funds) under the American Recovery and Reinvestment Act of 2009 (Recovery Act).  In addition, we received a citizen’s complaint alleging that the Authority used unethical procurement practices and did not plan to use Recovery Act funds effectively.  Our objectives were to evaluate the Authority’s capacity to administer additional capital funds received under the Recovery Act and determine whether the Authority followed Federal procurement regulations.  We expanded our objectives to include an assessment of the eligibility of the Authority’s planned green renovation of 68 senior housing units using a $7.6 million Public Housing Capital Fund Competitive (Recovery Act Funded) grant.

The Authority lacked sufficient capacity to administer the additional $9.2 million in capital funds it received under the Recovery Act.  It failed to comply with procurement and financial management requirements in its administration of other capital and operating funds and could not provide assurance that it properly awarded more than $2.4 million for contracts. The Authority’s plan to substantially rehabilitate 68 senior housing units into an energy-efficient, green community using a $7.6 million Recovery Act competitive capital fund grant was ineligible. The cost of renovating this development as planned would result in the inefficient and wasteful use of Federal funds and the unnecessary displacement of elderly tenants.

We recommend that the Director of the Greensboro Office of Public Housing continue increased oversight and monitoring of the Authority and require it to develop, implement, and enforce written policies and procedures for its procurement and financial management functions.  The Authority must also provide acceptable support for unsupported costs or repay them. We also recommend that the Deputy Assistant Secretary for Public Housing Investments rescind the Authority’s $7.6 million Recovery Act competitive grant.


Issue Date: July 21, 2010
Audit Report No.: 2010-BO-1005

Title: The Hartford Housing Authority’s Plan To Replace Boilers Did Not Meet Recovery Act and Federal Efficiency Requirements

We audited the Hartford Housing Authority (Authority) because it was awarded a $5 million Public Housing Capital Fund grant under the American Recovery and Reinvestment Act of 2009 (Recovery Act) and obligated the majority of the grant just before the required obligation deadline.  Our objectives were to determine whether the Authority (1) had adequate management controls over its obligation process, (2) maintained support for obligations, and (3) obligated its grant funds for eligible projects.

Overall, the Authority had adequate controls over obligating and supporting its Recovery Act capital grant.  However, it did not always obligate funds for eligible activities.

The Authority planned to use its Recovery Act funds to repair and federalize its State housing units.  However, its plans changed when the full scope of the required repairs and funds needed were determined.  The Authority shortened the normal procurement time and executed site improvement and boiler replacement contracts for the full amount of the grant before the statutory deadline.  The audit showed that most of the Authority's obligations were for eligible activities, properly procured, and adequately supported. 

However, the Authority contracted to replace 224 boilers including 33 boilers that had not reached the end of their useful life with boilers that did not meet energy efficiency requirements.  If this condition is not corrected, more than $1 million in Recovery Act and annual capital funds may not be used effectively and in accordance the Recovery Act and HUD regulations.

We recommend that the Director of HUD’s Boston Office of Public Housing ensure that the Authority stops its plans to replace boilers that have not reached the end of their economic life and reprograms $137,850 in future annual capital funds; and ensures that boilers scheduled for replacement in years 2015-2018 are replaced with energy-efficient boilers thereby putting more than $954,000 in Recovery Act funds to better use.


Issue Date: June 25, 2010
Audit Report No.: 2010-AT-0001

Title: HUD Evaluated and Selected Applications for the Recovery Act’s Neighborhood Stabilization Program 2 in Accordance With Applicable Requirements

We evaluated the U.S. Department of Housing and Urban Development’s (HUD) award process for the Neighborhood Stabilization Program 2 (NSP2). We initiated the review as part of the activities in our fiscal year 2010 annual audit plan. Our primary objective was to determine whether HUD’s methodology and controls for the evaluation and selection of applications for the $1.93 billion in NSP2 funds were in accordance with applicable requirements. We added a second objective to determine whether HUD included special conditions in the grant agreements of high-risk grantees. 

HUD’s methodology and controls for evaluating and selecting the applications were in accordance with requirements in the notice of fund availability. HUD followed the required procedures for evaluating applications against threshold requirements, such as program eligibility, and then rated the applications that passed threshold requirements against the six rating factors. At each step, HUD applied quality control procedures to ensure that its decisions were correct and supportable. HUD then ranked the applications according to their scores and properly selected 56 for funding. We expanded our work to review the grant agreements for the 56 selected grantees and found that HUD included special conditions as required by the regulations.

There are no recommendations in this report since no reportable deficiencies were identified.


Issue Date: June 4, 2010
Audit Memorandum No.: 2010-NY-1804

Title: The Rochester Housing Authority, Rochester, NY, Had Financial Control Weaknesses That Could Affect Its Capacity to Administer Recovery Act Funds

We performed a capacity review to assess the Rochester Housing Authority’s (Authority) administration of its capital funding program.  The Authority was awarded $5.9 million in capital funds under the Recovery Act.  Our review determined that the Authority had weaknesses in its financial controls that if left unaddressed could lead to its having a diminished capacity to effectively administer its supplemental Recovery Act funds.  Specifically, the Authority (1) charged ineligible and unsupported expenses to its capital fund program; (2) failed to reimburse eligible expenses from its capital fund program; and (3) inaccurately allocated employee payroll expenses charged to its capital fund program.  Except for these issues, Authority officials demonstrated a positive attitude toward establishing and implementing additional financial controls, their procurement controls comply with regulations and their capital program outputs are in accordance with their established plans.  Thus, overall, the Authority had the capacity to effectively administer its capital fund program supplemental funds provided under the Recovery Act according to applicable requirements.


Issue Date: June 3, 2010
Audit Memorandum No.: 2010-FW-1804

Title: The City of Oklahoma City Had the Capacity to Manage Recovery Acts Fun

As part of the Office of Inspector General’s commitment to ensure the proper use of America Recovery and Reinvestment Act and Housing and Economic Recovery Act funds, we assessed the City of Oklahoma City’s capacity and risks in three areas: internal controls, financial operations, and procurement.  Our review did not disclose any reportable conditions or control deficiencies.


Issue Date: May 13, 2010
Audit Report No.: 2010-PH-1009

Title: The Harrisburg, PA, Housing Authority Generally Administered Its Recovery Act Capital Fund Grant in Accordance With Applicable Requirements

On March 18, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the Authority a $4.4 million formula grant under the Recovery Act for its public housing capital fund program. The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes. The HUD Office of inspector General (OIG) conducted the audit to determine whether the Authority administered its grant funds provided under the Recovery Act according to Recovery Act requirements and applicable HUD rules and regulations. The OIG concluded that the Authority generally administered its grant funds according to Recovery Act requirements and applicable HUD rules and regulations. However, it did not accurately enter job creation information into the appropriate Federal reporting Web site. The OIG recommended that HUD require the Authority to develop and implement controls to ensure that Recovery Act job creation data it enters into the Federal reporting Web site are accurate.


Issue Date: May 13, 2010
Audit Report No.: 2010-FW-1003

Title: The Housing Authority of the Sac and Fox Nation of Oklahoma, Shawnee, OK, Did Not Demonstrate the Administrative Capacity To Appropriately Expend Its Recovery Act Funding

We audited the Housing Authority of the Sac and Fox Nation of Oklahoma’s (Authority) American Recovery and Reinvestment Act of 2009 (Recovery Act) funds.  The objective was to determine whether the Authority had the capacity to use its Recovery Act funds in accordance with U. S. Department of Housing and Urban Development requirements.  We reviewed the Authority because of concerns identified in a previous audit of the Authority.  The Authority did not always administer its procurement contracts or acquire property for planned Recovery Act activities in accordance with requirements.  Specifically, it did not prepare a cost estimate or technical evaluation factors for its architectural services contract or acquire two low-rent homes in accordance with HUD regulations.  Further, it charged Recovery Act expenditures to other grants, which resulted in an inaccurate Recovery Act report.  Until the Authority implements the necessary controls, it lacks the administrative capacity to expend its Recovery Act funding in accordance with requirements.  We recommend that the Administrator for the Southern Plains Office of Native American Programs initiate enforcement actions to require the Authority to follow procurement and acquisition requirements; ensure that staff understands and complies with procurement and environmental review requirements; and properly report Recovery Act activities.  Further, the Administrator should increase monitoring and oversight of the Authority’s Recovery Act planned activities and/or provide technical assistance and enter into a performance agreement with the Authority.


Issue Date: May 7, 2010
Audit Report No.: 2010-LA-1010

Title: Arizona Department of Housing’s Administration of Its Recovery Act Grant: Homelessness Prevention and Rapid Re-Housing Program

We audited the Homelessness Prevention and Rapid Re-Housing Program at the State of Arizona Housing Department (Department) because it was the largest single Homelessness Prevention and Rapid Re-Housing Program grant awarded within Arizona under the American Recovery and Reinvestment Act of 2009 (Recovery Act).  Our objective was to determine whether the Department administered the grant in compliance with Recovery Act and other applicable regulations.  We found that the Department had adequate policies and procedures to ensure that Recovery Act funds were accounted for separately and reporting requirements were met.  However, it did not have adequate policies and procedures to ensure that its subrecipients properly established eligibility for program participants and activities and maintained source documents for program expenditures in accordance with the applicable documentation requirements for Federal grants.  Further, the Department’s policies and procedures were not adequate to ensure that subrecipients received adequate training and monitoring to ensure compliance with the specific Homelessness Prevention and Rapid Re-Housing Program regulations.  We recommend that HUD require the Department to provide supporting documentation or repay unsupported amounts for $75,543 in program expenditures.  We also recommend that HUD require the Department to provide adequate training and monitoring to its subrecipients to ensure that they have implemented policies and procedures to comply with Homelessness Prevention and Rapid Re-Housing Program requirements and to maintain appropriate source documentation for program expenditures.  By ensuring that its subrecipients properly establish and document that program participants and activities are eligible, the Department will reduce the risk of waste, fraud, and abuse for its remaining Recovery Act funds under the program.


Issue Date: May 3, 2010
Audit Report No.: 2010-PH-1007

Title: The Elkton Housing Authority, Elkton, MD, Did Not Comply With HUD Regulations in Obligating and Disbursing Recovery Act Capital Funds

On March 18, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the Elkton Housing Authority (Authority) a $286,947 grant under the American Recovery and Reinvestment Act of 2009 (Recovery Act) for its public housing capital fund program. The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes. The HUD Office of Inspector General (OIG) conducted the audit to determine whether the Authority administered its grant funds provided under the Recovery Act according to Recovery Act requirements and applicable HUD rules and regulations. The OIG concluded that the Authority did not comply with HUD regulations in obligating and disbursing capital funds. Specifically, the Authority did not award its Recovery Act contract totaling $124,875 according to requirements, and failed to ensure that goods used for its Recovery Act project complied with the ”buy American” requirements. The Authority also improperly drew down $28,695 for administrative costs and did not accurately report the number of jobs created as a result of its Recovery Act projects. The OIG recommended that HUD require the Authority to (1) provide documentation to support the evaluation of proposals and the selection of the contractor or reimburse HUD $124,875 from non-Federal funds, (2) provide documentation to support that goods used for its Recovery Act project were produced in the United States, (3) provide documentation to support the administrative cost requested and received or reimburse HUD $28,695 from non-Federal funds, and (4) develop and implement adequate procedures to ensure that Recovery Act activities meet HUD requirements.


Issue Date: April 30, 2010
Audit Report No.: 2010-CH-1006

Title: The Other Place, Inc., Dayton, OH, Needs To Improve the Administration of Its Homelessness Prevention and Rapid Re-Housing Program Under the American Recovery and Reinvestment Act of 2009

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited The Other Place, Inc.’s (The Other Place) use of the American Recovery and Reinvestment Act of 2009’s (Act) Homelessness Prevention and Rapid Re-Housing Program (program) funds. The Other Place was selected for audit based upon a citizen’s complaint to the Recovery Accountability and Transparency Board that was forwarded to our office. The complainant alleged that the City of Dayton, OH (City), The Other Place, and possibly Montgomery County, OH engaged and set-up an unlicensed transitional housing shelter in violation of State of Ohio (State) and/or the City’s laws, and was leasing units far in excess of the true value for comparable units. Our objectives were to determine whether The Other Place used program funds effectively and efficiently and complied with HUD’s requirements. The Other Place generally used its program funds in accordance with HUD’s and its requirements. It did not engage or set up an unlicensed transitional housing shelter in violation of State and/or City laws and did not lease units far in excess of the true value for comparable units. However, The Other Place’s administration of its program needs improvement. It provided rental assistance for units with program rents that were in excess of fair market rents for the area and for a larger unit than a program participant resided in. As a result, nearly $1,000 in program funds was not used effectively and efficiently or in accordance with HUD’s requirements. Further, The Other Place did not ensure that the initial program participant consultation and eligibility determination was completed in a timely manner. Program participants began receiving rental assistance beginning on October 1, 2009, but the program application forms were not completed by the participants until December 2009. However, the participants were eligible to receive program rental assistance.


Issue Date: April 23, 2010
Audit Memorandum No.: 2010-DE-1801

Title: The Fort Belknap Indian Community in Harlem, MT, Had Weaknesses That Could Significantly Affect Its Capacity To Administer Its Recovery Act Funding

Fort Belknap Indian Community (Fort Belknap) received more than $1 million in Recovery Act funding to provide additional funding to its Indian Housing Block Grant program. HUD's Office of Inspector General (OIG) evaluated Fort Belknap's capacity to administer its Recovery Act funds. The OIG found weaknesses that could significantly affect Fort Belknap’s capacity to administer these funds and recommended that HUD increase monitoring and oversight of Fort Belknap’s administration of the Recovery Act funds.


Issue Date: April 21, 2010
Audit Memorandum No.: 2010-SE-1801

Title: Seattle Housing Authority's Capacity to Administer Recovery Act Funding Under the Capital Fund Program

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General conducted a capacity review of Seattle Housing Authority’s (Authority) capital fund to determine whether there was evidence that the Authority lacked the capacity to adequately administer its Recovery Act funding in accordance with requirements. We did not find evidence that the Authority lacked the capacity to adequately administer its Recovery Act funding.


Issue Date: April 16, 2010
Audit Memorandum No.: 2010-BO-0801

Title: HUD Region 1 Community Planning and Development Offices’ Monitoring of Homelessness Prevention and Rapid Re-Housing Program Grants Funded Under the American Recovery and Reinvestment Act Was Appropriately Targeted to Higher Risk Grantees

We reviewed the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development’s (CPD) risk assessment process. We initiated the review as part of the activities in our fiscal year 2010 annual audit plan. Our objective was to determine whether CPD had established and properly implemented a risk assessment process that used appropriate measures to determine risk and identify grantees for monitoring.

We found that CPD had established and implemented a risk assessment process that used relevant assessment factors to determine risk and identify grantees for monitoring. We identified and reviewed risk assessment factors in existence, evaluated whether they were adequate, and considered additional factors required under the American Recovery and Reinvestment Act 0f 2009. The risk assessment factors in place were adequate to identify grantees for appropriate monitoring. Additionally, the risk analyses prepared annually were used to select grantees for later monitoring.

There are no recommendations made in this report since no reportable deficiencies were identified.

Issue Date: April 14, 2010
Audit Memorandum No.: 2010-CH-1805

Title: The Benton Harbor Housing Commission of Benton Harbor, MI, Had Sufficient Capacity To Adequately Administer Its Recovery Act Funding

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act), the U.S. Department of Housing and Urban Development's Office of Inspector General conducted a capacity review of the Benton Harbor Housing Commission’s (Commission) operations. We selected the Commission based upon the results of our audit of the Commission’s Public Housing Capital Fund (Capital Fund) program (see Office of Inspector General audit report #2006-CH-1010, issued May 18, 2006). Our objective was to determine whether there was evidence that the Commission lacked the capacity to adequately administer its Recovery Act funding. Under the Recovery Act, HUD allocated more than $600,000 in Capital Fund program funding to the Commission. Based upon our review, under the direction of the current executive director, the Commission had sufficient capacity to effectively and efficiently administer its Recovery Act funding.


Issue Date: April 13, 2010
Audit Report No.: 2010-PH-1006

Title: Housing Authority of the City of Pottsville, PA, Generally Administered Capital Funds Provided Under the Recovery Act According to Recovery Act Requirements and Applicable HUD Rules and Regulations

On March 18, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the Authority a $992,895 grant under the Recovery Act for its public housing capital fund program. The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes. The HUD Office of inspector General (OIG) conducted the audit to determine whether the Authority administered its grant funds provided under the Recovery Act according to Recovery Act requirements and applicable HUD rules and regulations. The OIG concluded that the Authority generally administered its grant funds according to Recovery Act requirements and applicable HUD rules and regulations. However, it did not prepare independent cost estimates before soliciting bids for its grant-funded activities. The OIG recommended that HUD require the Authority to develop and implement controls to ensure that it creates independent cost estimates as required and documents them in its contract files.


Issue Date: April 13, 2010
Audit Report No.: 2010-FW-0002

Title: HUD’s Recapture and Reallocation Plan for Recovery Act Public Housing Capital Fund Grants Had Weaknesses

We audited the U. S. Department of Housing and Urban Development’s (HUD) compliance with obligation, recapture, and reallocation requirements for the American Recovery and Reinvestment Act of 2009 (Recovery Act) Public Housing Capital Fund program.  Specifically, its plans to recapture unobligated Recovery Act Public Housing Capital Fund formula grants by the March 17, 2010 obligation deadline and to reallocate the recaptured funds.  HUD’s plan was a generalized description of the process it would undertake to recapture and reallocate formula grant funds not obligated by the deadline.  HUD should improve its plan by revising it to include more detailed procedures for accomplishing HUD’s goals and a timeline for completing them and use this plan for future recapture and reallocation events.


Issue Date: March 31, 2010
Audit Memorandum No.: 2010-CH-1804

Title: The City of Saginaw, MI, Needs To Improve Its Capacity To Effectively and Efficiently Administer Its Community Development Block Grant Program Under the American Recovery and Reinvestment Act of 2009

The U.S. Department of Housing and Urban Development's Office of Inspector General reviewed the City of Saginaw’s (City) Community Development Block Grant (Block Grant) program under the American Recovery and Reinvestment Act of 2009 (Act). The review was part of the activities in our fiscal year 2010 annual audit plan. We selected the City based upon the results of our prior audit of the City’s Block Grant-funded demolition activities. Our objective was to determine whether the City had the capacity to effectively and efficiently administer its Block Grant program under the Act. We found that the City’s capacity to effectively and efficiently administer its Block Grant program under the Act had weaknesses. Specifically, the City: (1) did not have documentation, such as a use survey, to support that work associated its program principally benefited Saginaw’s low- to moderate- income residents; (2) lacked a work completion schedule in its program contract; (3) did not follow HUD’s regulations and its own requirements for monitoring the program project; (4) had not established sufficient policies and procedures for its Block Grant program under the Act.


Issue Date: March 18, 2010
Audit Report No.: 2010-BO-0002

Title: HUD’s Office of Community Planning and Development Had Established and Implemented an Appropriate Risk Assessment Process

We reviewed the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development’s (CPD) risk assessment process. We initiated the review as part of the activities in our fiscal year 2010 annual audit plan. Our objective was to determine whether CPD had established and properly implemented a risk assessment process that used appropriate measures to determine risk and identify grantees for monitoring.

We found that CPD had established and implemented a risk assessment process that used relevant assessment factors to determine risk and identify grantees for monitoring. We identified and reviewed risk assessment factors in existence, evaluated whether they were adequate, and considered additional factors required under the American Recovery and Reinvestment Act 0f 2009. The risk assessment factors in place were adequate to identify grantees for appropriate monitoring. Additionally, the risk analyses prepared annually were used to select grantees for later monitoring.

There are no recommendations made in this report since no reportable deficiencies were identified.


Issue Date: March 17, 2010
Audit Report No.: 2010-LA-1008

Title: The City of Los Angeles, CA, Generally Had Sufficient Capacity and Adequate Internal Controls To Administer Its Neighborhood Stabilization Program Funds

We completed a capacity review of the City of Los Angeles’ Housing Department’s (City) Neighborhood Stabilization Program (Program).  We performed the review because Housing and Economic Recovery Act of 2008 (HERA) reviews are part of our annual audit plan and the program was identified as high risk.  We previously audited several different aspects of the City’s HOME Investment Partnerships program, all of which disclosed significant monitoring and oversight problems.  Thus, given the significant amount of funds awarded and the prior audit results, we had concerns regarding the City’s capacity to administer the Program funds.  The City applied for, and was subsequently awarded, additional funds through the American Recovery and Reinvestment Act of 2009 (ARRA).  Our objective was to determine whether the City had sufficient capacity and the necessary controls to manage and administer Program funds under HERA and ARRA.  We found that the City generally has sufficient capacity to adequately administer its Program funding.


Issue Date: March 12, 2010
Audit Memorandum No.: 2010-NY-1803

Title: The New York City Housing Authority Had the Capacity to Administer Capital Funds Provided Under the American Recovery and Reinvestment Act

We performed a review of the New York City Housing Authority’s (Authority) capacity to administer the approximately $423 million in capital funds awarded under the American Recovery and Reinvestment Act of 2009 (Recovery Act) in support of the Office of Inspector General’s (OIG) goal to report on Recovery Act recipients’ capacity to administer funds received.  The objective of the review was to determine whether the Authority’s general, financial, and procurement controls were adequate to provide assurance that it had the capacity to effectively manage the Recovery Act funds.

Our limited review indicated that the Authority’s general, financial, and procurement controls were generally adequate to provide assurance that it had the capacity to effectively manage its Recovery Act funds.  Authority officials had plans for using the funds in a timely manner and had addressed previously reported weaknesses in its Capital Fund program administration.  To provide greater assurance that funds are appropriately obligated and expended, we recommended that HUD closely monitor the Authority to ensure that it will achieve planned accomplishments within the prescribed timeframes and take action necessary to ensure compliance with Recovery Act requirements.


Issue Date: February 2, 2010
Audit Report No.: 2010-NY-1007

Title: The City of Jersey City, NJ, Needs To Strengthen Its Controls To Ensure That It Will Be Able To Effectively Administer CDBG-R Funds

We completed an audit of the City of Jersey City's (City) capacity to administer Community Development Block Grant (CDBG) funding provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act).   Our objectives were to evaluate the City’s capacity in the areas of internal controls, eligibility, financial controls, procurement, and output/outcomes in administering CDBG funds.

The City generally had adequate financial controls and staff capacity to administer its CDBG funds; however, it needs to strengthen its controls to ensure that it will be able to effectively administer CDBG funds provided under the Recovery Act (CDBG-R) and comply with applicable requirements.  Specifically, the City did not ensure that costs charged to CDBG planning and administration by its subgrantee were reasonable and necessary, and have adequate procedures to ensure compliance with procurement requirements. 

We recommend that the Director of HUD’s New Jersey Office of Community Planning and Development instruct the City to strengthen its controls and (1) repay $61,718 in ineligible costs charged to CDBG planning and administration, (2) support the allocability of $117,721 in planning and administration costs charged to the CDBG program,and (3) ensure that procurements are conducted in accordance with all Federal requirements.

Issue Date: January 26, 2010
Audit Report No.: 2010-AT-1804

Title: The Chattanooga Housing Authority Demonstrated Capacity To Administer Its Recovery Act Funds

The Chattanooga Housing Authority (Authority) was awarded a $6.35 million capital fund formula grant and a $4.8 million capital fund competitive grant under the American Recovery and Reinvestment Act of 2009 (Recovery Act). In accordance with our goal to review funds provided under the Recovery Act, we conducted a capacity review of the Authority’s operations. The objective was to determine whether the Authority had the capacity to adequately administer its capital fund Recovery Act funding according to applicable requirements. Based upon our limited review, the Authority had the capacity to properly administer its capital fund Recovery Act grants. This memorandum does not contain any reportable conditions or recommendations.


Issue Date: January 20, 2010
Audit Report No.: 2010-BO-1004

Title: The City of Waterbury, Connecticut’s Subrecipient, Waterbury Development Corporation, Needs to Improve Its Capacity to Effectively Administer Its Neighborhood Stabilization Program

In accordance with our goal to review and ensure the proper administration of Neighborhood Stabilization Program (NSP) funds provided under the Housing and Economic Recovery Act of 2008 (HERA) and the American Recovery and Reinvestment Act of 2009 (Recovery Act), we conducted a capacity review of the City of Waterbury’s (subgrantee), Waterbury Development Corporation’s, operations (subrecipient), who has responsibility for administering the City’s NSP program. The City of Waterbury is a subgrantee of the State of Connecticut, Department of Economic and Community Development (grantee). Our objective was to determine whether the subrecipient had sufficient capacity to adequately administer the subgrantee’s NSP funds.

Our review found that the subrecipient needs to improve its capacity to effectively administer NSP funds provided through the HERA. We found that the subrecipient 1) staffing was inadequate, 2) had an inadequate selection process for approving NSP applicants, 3) may have delays in completing projects, 4) had inadequate support for the scope of work developed for two projects, 5) had an inadequate procurement process, 6) will not meet performance goals for its rehabilitation activities, and 7) did not properly charge NSP expenses to the program. As a result, the subrecipient may not meet program requirements and its goals for the NSP.

We recommend that the Hartford Connecticut Director of HUD’s Office of Community Planning and Development require the grantee to ensure the subgrantee/subrecipient 1) implements adequate policies, procedures, and controls to ensure that NSP funds are used effectively and efficiently, and in accordance with applicable requirements, 2) hires additional staff, as needed, to assist in administrating the NSP to ensure that the subrecipient has sufficient capacity to effectively and efficiently administer program funds, 3) strengthens its procurement controls to ensure that they are following the subgrantee's policies and Federal policies when procuring services, 4) submits an amendment to its NSP local action plan reducing the number of units to be completed for its acquisition and rehabilitation activities. and 5) requests comments from the Connecticut State Historical Preservation Office for properties approved for NSP rehabilitation funding that are not in accordance with the Secretary of the Interior’s Rehabilitation Standards and Guidelines.

We also recommend that the Hartford Connecticut Director of HUD’s Office of Community Planning and Development 1) perform additional monitoring, and provide technical assistance to the subrecipient, as needed, to ensure that the subrecipient properly administers the NSP funding in accordance with federal requirements, and 2) review salaries charged by staff to determine whether costs were properly charged to HUD programs and require the subrecipient to make adjustments to its direct and indirect expenses as necessary.


Issue Date: January 19, 2010
Audit Report No.: 2010-LA-1005

Title: The Department of Hawaiian Home Lands Generally Had Capacity To Manage; However, It Needs To Improve Controls Over Its Administration of Recovery Act Funds

As part of the Office of Inspector General’s annual audit plan, we completed a capacity review of the Department of Hawaiian Home Lands’ (Department) American Recovery and Reinvestment Act of 2009 (Recovery Act) funding.  Our objective was to determine whether the Department had sufficient capacity to manage and administer its Recovery Act funding.  Specifically, we reviewed and assessed the Department’s capacity in the following areas:  internal controls, financial operations, and procurement.  The Department generally had sufficient capacity to manage its Recovery Act funding.  However, the Department could improve its controls by (1) developing a more comprehensive set of written policies and procedures to describe its drawdown and disbursement process, (2) ensuring that its contractors had not been debarred or suspended before awarding federally funded contracts, (3) obtaining tax clearance certificates from its subcontractors, and (4) performing adequate reviews of weekly certified payrolls to ensure that its contractors and subcontractors paid their employees proper wages and fringe benefits in accordance with the Davis-Bacon Act and Hawaii Revised Statutes.  In general, the Department attributed its weaknesses to staff oversight. 

We recommend that the Deputy Assistant Secretary, Office of Native American Programs, require the Department to ensure that it (1) develops detailed written policies and procedures regarding its drawdown and disbursement process, (2) performs a search on the General Services Administration’s Excluded Parties List System and the State of Hawaii’s List of Debarred and Suspended Persons before it awards its federally funded contracts, (3) obtains tax clearance forms to show that all delinquent taxes against the contractor’s subcontractor have been paid, and (4) performs adequate reviews of the weekly certified payrolls in compliance with the Davis-Bacon Act and Hawaii Revised Statutes.

Issue Date: January 15, 2010
Audit Memorandum No.: 2010-FW-0801

Title: HUD Guidance on American Recovery and Reinvestment Act Capital Fund Physical Needs Assessment

We reviewed the U. S. Department of Housing and Urban Development’s (HUD’s) guidance on using American Recovery and Reinvestment Act of 2009 (Recovery Act) capital funding for physical needs assessments.  Our objective was to determine whether HUD’s guidance to grantees on using Recovery Act capital funds for physical needs assessments was sufficient to ensure grantees had the information needed to avoid missing the grant obligation deadline of March 17, 2010.  HUD took actions in a timely manner to address concerns raised during the review.  We made no further recommendations.


Issue Date: January 14, 2010
Audit Memorandum No.: 2010-NY-1802

Title: Control Weaknesses at the Syracuse Housing Authority, Syracuse, New York May Affect Its Capacity to Administer American Recovery and Reinvestment Act Funds

As part of the Office of Inspector General’s (OIG) obligation to ensure accountability and transparency in the use of the American Recovery and Reinvestment Act of 2009 (Recovery Act) funds, we performed a capacity review to assess the Syracuse Housing Authority’s (Authority) administration of its capital funding program.  The Authority was awarded $4.5 million in capital funds under the Recovery Act.  Our objective was to evaluate the Authority’s capacity in the area of internal controls, eligibility, financial controls, procurement, and outputs/outcomes to effectively administer its Recovery Act funds.  Our review determined that significant control weaknesses diminished the Authority’s capacity to effectively administer its capital fund program in the areas of internal controls, eligibility, financial controls, procurement, and output/outcomes.  Specifically, the Authority failed to (1) complete its 2002 CFFP in a timely manner, and additional CFP grants remain open; (2) follow HUD-required contracting and procurement regulations, thus limiting competition and potentially causing excessive and/or ineligible costs; and (3) implement a proper control environment, which contributed to management and financial control deficiencies.

We recommend that HUD (1) closely monitor the operations of the Authority to ensure compliance with all Capital Fund Financing Program (CFFP), Capital Fund Program, and Recovery Act deadlines and objectives, and (2) certify that the Authority’s procurement practices meet the federal procurement requirements.  Further, we recommend that HUD instruct the Authority to (3) immediately complete its 2002 CFFP bond program activities and use the remaining $1.3 million for eligible improvements, (4) submit a viable plan to obligate capital funds and supplemental Recovery Act funds, (5) establish and implement operational procedures to ensure compliance with applicable regulations for all future procurement activities, and (6) institute effective management and financial controls to ensure successful administration and completion of the Recovery Act program and objectives.

Issue Date: January 12, 2010
Audit Memorandum No.: 2010-CH-1802

Title: The City of East Cleveland, OH, Had Sufficient Capacity To Effectively and Efficiently Administer Its Recovery Act Block Grant Program

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act), the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General conducted a capacity review of the City of East Cleveland’s (City) operations. We also selected the City based upon the results of our audit of the City’s Community Development Block Grant (Block Grant) and HOME Investment Partnerships (HOME) programs (see OIG audit report #2009-CH-1008, issued May 11, 2009). Our objective was to determine whether there was evidence to indicate that the City lacked the capacity to adequately administer its Recovery Act funding. Based upon our review, we determined that the City had sufficient capacity to effectively and efficiently administer its Recovery Act Block Grant program. This determination does not reflect a finding of sufficient capacity to administer its regular Block Grant, HOME, or Neighborhood Stabilization programs.


Issue Date: January 12, 2010
Audit Memorandum No.: 2010-CH-1801

Title: Wayne County, MI, Needs To Improve Its Capacity to Effectively and Efficiently Administer Its Neighborhood Stabilization Program

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General reviewed Wayne County’s (County) Neighborhood Stabilization Program (Program). The review was part of the activities in our fiscal year 2009 annual audit plan. We selected the County based upon a request from HUD’s Detroit Office of Community Planning and Development. Our objective was to determine whether the County had the capacity to effectively and efficiently administer its Neighborhood Stabilization Program. Congress amended the Neighborhood Stabilization Program and increased its funding as part of the American Recovery and Reinvestment Act of 2009 (Recovery Act). As part of a consortium, the Wayne County Land Bank Corporation (Corporation), which is controlled by the County, submitted an application to HUD, dated July 13, 2009, that totaled $290 million in additional Neighborhood Stabilization Program funds under the Recovery Act. The application is under review by HUD.

We found that the County needs to improve its capacity to effectively and efficiently administer its Neighborhood Stabilization Program. Specifically, the County: (1) did not ensure that the Corporation fully complied with HUD’s regulations for full and open competition regarding the procurement of project management services for the County’s Neighborhood Stabilization Program; (2) had not established sufficient policies, procedures, and controls for its Program as of December 16, 2009; and (3) provided a detailed fiscal year 2010 through 2013 budget for planning and administrative costs ($2,609,096) that exceeded 10 percent of the County’s total Program grant and its revised Program budget for planning and administrative costs ($2,590,915) by more than $18,000. Lastly, HUD’s Detroit Office of Community Planning and Development did not include sufficient special conditions in its Neighborhood Stabilization Program grant agreement with the County.


Issue Date: January 11, 2010
Audit Memorandum No.: 2010-HA-0001

Title: HUD’s Office of Healthy Homes and Lead Hazard Control Awarded Grants to Ineligible Applicants

We audited the U.S. Department of Housing and Urban Development’s Office of Healthy Homes and Lead Hazard Control’s (OHHLHC) selection procedures used to award American Recovery and Reinvestment Act of 2009 (Recovery Act) grants. Our objective was to determine whether OHHLHC awarded (1) Recovery Act funds in accordance with the selection criteria specified in the fiscal year 2008 notices of funding availability (notices) and the Recovery Act and (2) fiscal year 2008 funds in accordance with the selection criteria.

We determined that OHHLHC did not have adequate controls to ensure that only qualified applicants were selected to receive grant funds. As a result, OHHLHC improperly awarded $1.9 million in Recovery Act funds to the City of Greenville, NC (Greenville), and $874,821 to Healthy Homes Resources. In addition, OHHLHC awarded $3 million in fiscal year 2008 funds to the City of Cincinnati, OH (Cincinnati).

We recommend that the Director of OHHLHC rescind the $2.8 million in Recovery Act funds that was improperly awarded to Greenville and Healthy Homes Resources, ensure that the selection procedures are followed, and take appropriate actions against employees. We also recommend that the Director of OHHLHC rescind the $3 million in fiscal year 2008 funding that was awarded to Cincinnati, ensure that the application review panels follow threshold review requirements when determining eligibility, and take appropriate action against employees who circumvented the regulations.


Issue Date: January 6, 2010
Audit Memorandum No.: 2010-FW-1803

Title: The City of Grand Prairie, TX, Maintains Capacity to Adequately Administer Recovery Funding But Needs to Make Program Improvements

As part of our organization’s commitment to ensure the proper use of recovery funding, we performed a review of the City of Grand Prairie’s (City) operations to evaluate its capacity to administer the $3.2 million received under the Housing and Economic Recovery Act of 2008 and the American Recovery and Reinvestment Act of 2009 (Recovery Act).  Specifically, our objective was to review and assess the City’s capacity and risks in the following areas:  basic internal controls, financial operations, and procurement.  Generally the City maintained capacity to administer its Recovery Act funding.  We made recommendations regarding the potential favoritism and conflicts of interest, and the inclusion of ineligible expenses in Recovery Act programs.  Also, the City needs to make some improvements to its HOME program and to its contracting and payment processes, and policies and procedures.


Issue Date: December 29, 2009
Audit Report No.: 2010-LA-1004

Title: Although the County of Riverside Had Sufficient Overall Capacity, It Lacked Necessary Controls To Administer Its Neighborhood Stabilization Program

We completed a capacity review of the County of Riverside’s (County) Neighborhood Stabilization Program (Program).  We performed the audit because Housing and Economic Recovery Act of 2008 reviews are part of the Office of the Inspector General’s annual audit plan and the program was identified as high risk.  In addition, the County was awarded significant Program funds of $48.6 million.  Our objective was to determine whether the County had sufficient capacity and the necessary controls to manage and administer the Program.  We found the County generally had sufficient capacity to administer its allocation of Program funds.  The County has applied for additional funding under the American Recovery and Reinvestment Act of 2009 to continue its Program activities and based on our review, its procedures and controls should be adequate to administer the continuation of the program.  However, the County could improve internal controls for Program activities by developing separate, specific, and well-documented policies and procedures for acquisition, rehabilitation, and resale/rental activities.  We recommend that the Director of the Los Angeles Office of Community Planning and Development require the County to create and maintain policies and procedures specific to Program acquisition activities.


Issue Date: December 29, 2009
Audit Memorandum No.: 2010-FW-1802

Title: The City of San Antonio, TX, Demonstrated Capacity to Administer Its Recovery Act Grant

As part of the Office of the Inspector General’s (OIG) directive to determine whether safeguards exist to ensure that American Recovery and Reinvestment Act of 2009 (Recovery Act) funds are used for their intended purposes, we conducted a capacity review of the City San Antonio, TX (City) operations.  Our objective was to determine whether the City had the capacity to account for Recovery Act funds and the controls to ensure that it expends those funds only for eligible program activities. 

The U.S. Department of Housing and Urban Development’s (HUD’s) San Antonio field office determined that there was some risk in the City’s programs funded through HUD’s Office of Community Planning and Development (CPD).  HUD’s risk analyses for fiscal year 2009 indicated high risk in the City’s Community Development Block Grant (CDBG) program, and medium risk in three other programs.  Most of the risk in the City’s CDBG program was due to the high funding level (more than $10 million in fiscal year 2009).  If not for the high funding level, the City’s CDBG program would have been medium risk, while the other three programs would have been medium to low risk.

We applied Office of Management and Budget’s accountability objectives when considering CPD’s significant risk factors.  Based upon our limited review, the City appeared to have the capacity to adequately administer its Recovery Act funding.  It had written policies and procedures, a staffing plan including adequate segregation of duties, and a plan for using Recovery Act funding.  However, based on HUD’s risk assessment, the San Antonio, TX, CPD office should closely monitor the City’s spending of Recovery Act funds.

Issue Date: December 22, 2009
Audit Memorandum No.: 2010-NY-1801

Title: The City of Utica, New York, Has the Capacity to Administer Lead-Based Paint Funds Provided Under the American Recovery and Reinvestment Act of 2009

As part of the Office of Inspector General’s (OIG) obligation to ensure accountability and transparency in the use of the American Recovery and Reinvestment Act of 2009 (Recovery Act) funds, we performed a capacity review to assess the City of Utica, New York’s (City) administration of its lead-based paint hazard control program. The City was awarded $2.04 million under the Recovery Act to carry out lead-based paint hazard control activities in privately owned homes. Our objective was to evaluate the City’s capacity in the area of internal controls, eligibility, financial controls, procurement, and outputs/outcomes to effectively administer its lead hazard control program funds provided under the Recovery Act in accordance with applicable requirements. Based on our review, the City has the capacity to effectively administer its lead hazard grant funds provided under the Recovery Act. This memorandum contains no recommendations.


Issue Date: December 18, 2009
Audit Memorandum No.: 2010-AT-1803

Title: Hillsborough County, FL, has the Capacity To Administer its Neighborhood Stabilization Program and To Accurately Enter Commitments for its HOME Investment Partnerships Program

Hillsborough County (County) received more than $19 million in Neighborhood Stabilization Program (NSP) funds from HUD that was authorized under Title III of the Housing and Economic Recovery Act. Also, the County applied for an additional $19 million in NSP funds under the American Recovery and Reinvestment Act of 2009. HUD's Office of Inspector General (OIG) evaluated the County's capacity to administer its NSP funds and whether it accurately reported HOME commitments within HUD’s Integrated Disbursement and Information System (IDIS).

Based on the review, the County had the capacity to administer its NSP. The County had made substantial and effective revisions to its organization and staffing to correct many of the past performance problems identified by HUD and its own internal assessments. It had established and implemented adequate NSP procedures, followed proper procedures in the procurement of contract services, hired or was in the process of hiring an adequate number of qualified staff, and arranged for other County departments to assist with NSP workload and was progressing in carrying out its NSP.

As of October 1, 2009, the County had not entered any obligations or expenditures into the Disaster Recovery Grant Reporting (DRGR) system. We also noticed that its staff had not obtained training on the use of the system and that its policy did not address timeliness for entering and reporting obligations and expenditures in the system. In addition, the County’s DRGR policy did not define what constituted an NSP obligation and the documentation required to properly support an obligation.

The County had a past problem with making inaccurate commitment entries into IDIS. We identified more than $748,000 in incorrect commitment entries made to IDIS before the County improved its controls. The inaccurate entries subjected the County to more than $61,000 that is subject to recapture by HUD because it did not ensure that written agreements were executed before it committed activities in IDIS.

We recommend that the Director of HUD’s Jacksonville Office of Community Planning and Development require the County (1) to mandate that all staff with DRGR responsibilities complete in house and or HUD assisted training on use of the system to ensure timely and proper entry of NSP obligations, expenditures, and performance reporting, (2) amend its draft DRGR policy to include timeliness for entering and reporting NSP obligations and expenditures, defining what constitutes an NSP obligation, and describing the type of documentation to be kept to support NSP obligations, and (3) recapture $61,256 in HOME funds which the County did not commit by the 24-month statutory deadline.


Issue Date: December 18, 2009
Audit Memorandum No.: 2010-FW-1001

Title: Dallas Housing Authority, Dallas, Texas, Demonstrated Capacity to Administer Its Recovery Act Capital Fund Formula Grant

As part of the Office of the Inspector General’s (OIG) directive to determine whether safeguards exist to ensure that American Recovery and Reinvestment Act of 2009 (Recovery Act) funds are used for their intended purposes, we audited the Dallas Housing Authority’s (Authority) Recovery Act Public Housing Capital Fund formula grant (grant).  Our objective was to evaluate the Authority’s capacity in the areas of internal controls, eligibility, financial controls, procurement, and output/outcomes in administering its grant.  Overall, the Authority demonstrated capacity to administer its grant in accordance with requirements.  However, the Authority should address the issues identified in the report to help ensure it fully expends its grant funds on eligible activities within Recovery Act deadlines.  Our recommendations included the U. S. Department of Housing and Urban Development working with the Authority to resolve documentation requirements for administration and management improvements expense categories and requiring the Authority to revise its budget and reallocate $280,000 in budgeted funds to other eligible activities.


Issue Date: December 16, 2009
Audit Memorandum No.: 2010-BO-1802

Title: The State of Maine’s Department of Economic and Community Development, Office of Community Development, Has Sufficient Capacity To Effectively Administer Its Neighborhood Stabilization Program

In accordance with our goal to review and ensure the proper administration of Neighborhood Stabilization Program (NSP) funds provided under the Housing and Economic Recovery Act of 2008 (HERA) and/or the American Recovery and Reinvestment Act of 2009 (ARRA), we conducted a capacity review of the operations of the State of Maine’s (State) Department of Economic and Community Development, Office of Community Development (Department). The Department has responsibility for administering the State’s NSP. Our objective was to determine whether the Department had the necessary capacity to adequately administer the State’s NSP funds provided through HERA. This memorandum report contains no recommendations.


Issue Date: December 15, 2009
Audit Memorandum No.: 2010-AO-0801

Title: HUD Needs to Ensure That the Housing Authority of New Orleans Strengthens Its Capacity to Adequately Administer Recovery Funding

As part of the Housing and Urban Development (HUD) Office of Inspector General’s obligation to ensure accountability and transparency in use of the American Recovery and Reinvestment Act of 2009 (ARRA) funds, we performed a review to assess the Housing Authority of New Orleans' (Authority) capacity to administer $34.5 million in ARRA funding.  Our objective was to evaluate the Authority’s capacity and risks in the following areas:  basic internal controls, financial operations, procurement, and outputs/outcomes.

The Authority had capacity deficiencies related to internal controls, financial operations, procurement, and inventory.  Specifically, the Authority lacked (1) internal control capacity related to staffing levels and segregation of duties; (2) financial capacity related to its accounts payable procedures, financial policies, and independent public accountant reviews; and (3) procurement capacity, as the Authority did not always comply with the procurement policy and the policy was not always clear.  The Authority generally ensured that its outputs and outcomes related to rehabilitation contracts were adequate.  However, it did not maintain an adequate inventory listing of items removed from some of the rehabilitated projects.  Due to capacity limitations, the Authority will encounter difficulty in both obligating and expending the $34.5 million in ARRA funds within the statutory time limits. While the Authority had taken measures to develop policies and procedures for obligating and expending the ARRA funds, the Authority’s prior performance continues to raise serious concerns about the Authority’s ability to comply with the statutory requirements and safeguard these limited resources.  Therefore, HUD, as the Authority’s administrative receiver, must make a realistic determination on the Authority’s ongoing capacity limitations. 

We recommended that HUD's Deputy Assistant Secretary require the Authority to (1) support or repay unsupported disbursements totaling $321,462; (2) maintain adequate staffing levels in its Finance, and Contracting and Compliance Departments, based upon the organizational structure.  In addition, as related to the Finance Department, the Authority should obtain qualified staff to perform the accounts receivable function; (3) amend its finance policies to specify approving officials, appropriate staff titles, and required approval forms and procedures.  In addition, the Authority should incorporate in its finance policy procedures related to expenditure of prepaid items and ensuring that independent public accountant audit findings are addressed in a timely manner; (4)  consider cross-training employees in the Finance Department and rotate respective roles periodically in an effort to prevent collusion; (5) amend its procurement policy to comply with 24 CFR 85.36; (6) consider labeling all asset inventory items obtained for rehabilitation before placing items into the inventory to ensure that its assets are safeguarded; adequately accounted for; and protected from loss, damage, and theft; (7) obtain a contractor to oversee the contracting, and the progress and completion of the work activities; and (8) contract with an accounting firm to maintain a separate accounting and biweekly reporting of ARRA funds expended on ARRA activities.  We also recommended that HUD's Deputy Assistant Secretary request that the Assistant Secretary for Public and Indian Housing immediately deobligate all or some of the Authority’s ARRA funds and reallocate the funds to housing authorities that can utilize the funds, if the lack of capacity continues and indicates the Authority’s inability to obligate or complete the planned work by the statutory deadline.

Issue Date: December 15, 2009
Audit Memorandum No.: 2010-FW-1801

Title: The State of Arkansas Has the Capacity to Manage Recovery Act Funding

The State of Arkansas (State) is scheduled to receive more than $15.67 million under the American Recovery and Reinvestment Act of 2009 (Recovery Act).  As part of our organization’s commitment to ensure the proper use of Recovery Act funds, we reviewed the State’s controls and operations.  Specifically, our objective was to determine whether the State has the capacity to account for Recovery Act funding and the controls to ensure that its recipients expend those funds for eligible program activities.  Based on our review, the State has the capacity and management controls to account for Recovery Act funding and ensure that its recipients spend the funds for eligible program activities within the allotted time.


Issue Date: December 14, 2009
Audit Memorandum No.: 2010-AT-1802

Title: The City of Atlanta, GA, Needs to Improve Certain Aspects of Its NSP to Meet the Program’s 18-Month Obligation Deadline

The City of Atlanta (City) received a $12.3 million Neighborhood Stabilization Program (NSP) grant from HUD that was authorized under Title III of the Housing and Economic Recovery Act. Also, the City applied for an additional $57.9 million in NSP funds under the American Recovery and Reinvestment Act of 2009. HUD's Office of Inspector General (OIG) evaluated the City's capacity to administer its NSP funds. The OIG found that the City has developed the organizational structure needed to administer its NSP and has hired a sufficient number of qualified staff to implement the program. However, the City needs to expedite actions to meet the program’s 18-month obligation deadline due to delays in executing implementation contracts and obligating funds, past performance problems that still require attention, procurement inconsistencies, and a lack of procedures for some components of its NSP. OIG recommended that HUD require corrective action on the deficiencies.


Issue Date: December 7, 2009
Audit Memorandum No.: 2010-BO-1801

Title: The State of Vermont’s Agency of Commerce and Community Development Had Sufficient Capacity To Effectively Administer Its Neighborhood Stabilization Program

In accordance with our goal to review and ensure the proper administration of Neighborhood Stabilization Program (NSP) funds provided under the Housing and Economic Recovery Act of 2008 (HERA) and/or the American Recovery and Reinvestment Act of 2009 (ARRA), we conducted a capacity review of the operations of the State of Vermont’s (State) Agency of Commerce and Community Development (Agency), which has responsibility for administering the State’s NSP. Our objective was to determine whether the Agency had the necessary capacity to effectively and efficiently administer the NSP funds provided through HERA. This memorandum report contains no recommendations.


Issue Date: December 2, 2009
Audit Memorandum No.: 2010-LA-1002

Title: Guam Housing and Urban Renewal Authority, Capital Fund Recovery Grant, Sinajana, Guam

We conducted a review of the Guam Housing and Urban Renewal Authority (the authority) because it received more than $1.9 million in Capital Fund Recovery Act Grant (grant) funding as part of the American Recovery and Reinvestment Act of 2009.  Our objectives were to determine whether the authority (1) had effective and efficient operations in place to manage its grant-funded projects and (2) had administered its grant funds in accordance with U.S. Department of Housing and Urban Development (HUD) rules and regulations.

The authority generally had effective and efficient operations in place to manage its grant-funded projects.  In addition, it generally administered its grant funds in accordance with HUD rules and regulations.

Issue Date: November 20, 2009
Audit Memorandum No.: 2010-AT-1801

Title: Miami-Dade County, Florida, Needs to Strengthen Controls over Its Neighborhood Stabilization Program

Miami Dade County, Florida (County) was awarded $62.2 million in Neighborhood Stabilization Program (NSP) funds under the Housing and Economic Recovery Act of 2008. Also, the County applied for an additional $162 million in NSP funds under the American Recovery and Reinvestment Act of 2009. HUD's Office of Inspector General (OIG) evaluated the County's capacity to administer its NSP funds. The OIG found that the County did not execute agreements between County departments, existing policies and procedures did not address NSP requirements, adequate supporting documentation for an NSP activity was not maintained, and NSP expenditures were improperly classified. The weaknesses could adversely affect the County's capacity to administer these funds, and the OIG recommended that HUD require corrective action on the deficiencies.


Issue Date: October 30, 2009
Audit Memorandum No.: 2010-DP-0801

Title: Review of HUD's Process for Monitoring Recipient Reporting for the American Recovery and Reinvestment Act of 2009

We audited HUD’s process for monitoring recipient reporting for the American Recovery and Reinvestment Act of 2009 (Recovery Act). The Recovery Accountability and Transparency Board (Board), created by the Recovery Act, has required the Inspector General community to evaluate Federal agencies’ process for monitoring recipient reporting of Recovery Act funds for the quarter ending September 30, 2009. The audit reports are to be issued to their agencies no later than October 30, 2009. The reports will also be submitted to the Board, which will compile the results and issue a consolidated report with recommendations for improvement across the Federal government. Our audit objective was to determine whether HUD had developed a process for performing limited data quality reviews of recipient reporting of recovery funds.

We found that HUD has made progress in the quality assurance process. HUD has established a Recovery Implementation Team that has developed Department-wide policies and procedures and provided guidance to HUD program offices. The Recovery Implementation Team has developed a process for performing limited data quality reviews of recipient reporting of Recovery Act funds. The team has also developed procedures to identify and notify the recipients of the need to make appropriate and timely changes to data submissions. HUD has begun reviewing data reported to FederalReporting.gov by recipients and identified possible data errors that require follow-up.

We also found areas that HUD needs to address, specifically, (1) not all prime recipients have filed all of the required quarterly reports, (2) HUD has not ensured that the prime recipients review the data submitted by subrecipients, and (3) HUD has not developed a process to identify subrecipients that demonstrate systemic or chronic reporting problems and/or otherwise fail to correct such problems as identified by the primary recipients.


Issue Date: October 26, 2009
Audit Memorandum No.: 2010-LA-0802

Title: Evaluation of the Final Front-End Risk Assessment for the Native American Housing Block Grant Program

We reviewed the Office of Native American Programs’ (ONAP) Front-End Risk Assessment (FERA) for the American Recovery and Reinvestment Act of 2009 (Recovery Act) funding for Native American Block Grant housing programs as part of our annual audit plan.  Our objective was to determine whether the FERA complied with the Office of Management and Budget’s (OMB) guidance for implementation of the Recovery Act, the Recovery Act’s streamlined FERA process, and U.S. Department of Housing and Urban Development (HUD) Handbook 1840.1, Departmental Management Control Program.

The FERA was generally prepared in accordance with OMB requirements and the Recovery Act programs are similar to the existing NAHASDA program.  We perceive that the overall risks will also be similar to those under NAHASDA, except for those associated with the additional workloads.  The FERA stated that ONAP planned to fill 34 existing vacancies and hire an additional 12 temporary employees to meet the increased reporting requirements and other responsibilities under the Recovery Act.  However, if ONAP hires a significant number of new staff, it will need to ensure that the new staff members receive sufficient and timely training to be effective in the administration and oversight of Recovery Act funds.


Issue Date: October 9, 2009
Audit Memorandum No.: 2010-LA-1801

Title: The Navajo Housing Authority's Implementation of the Recovery Act-Funded Projects which HUD Should Provide Additional Monitoring, Window Rock, AZ

We conducted a capacity review of the Navajo Housing Authority’s (Authority) operations.  The objective of the review was to evaluate the Authority’s capacity to administer its American Recovery and Reinvestment Act (Recovery Act) funds and identify related potential internal control weaknesses that could impact its ability to properly administer the funds.  We did not find evidence indicating that the Authority lacked the basic capacity to administer its Recovery Act funding.  However, we did identify some concerns that could impact its ability to meet the Recovery Act obligation and expenditure timeframes and ensure that its funds are expended in accordance with program requirements.

We recommended that the Administrator, Southwest Office of Native American Programs (1) provide additional monitoring and technical assistance related to the Authority’s implementation of the Recovery Act project, as needed, to ensure that the Authority has the appropriate capacity to properly administer its Recovery Act funds and (2) require the Authority to review it written policies and procedures and adapt them to address construction contractor procurement and monitoring.

Issue Date: September 30, 2009
Audit Memorandum No.: 2009-DP-0007

Title: Review of Selected Controls within the Disaster Recovery Grant Reporting System used for Recovery Act Reporting

The HUD Office of Inspector General audited selected controls within the Disaster Recovery Grant Reporting system (DRGR) related to Neighborhood Stabilization Program (NSP). DRGR is an existing system that was modified to track close to $5.9 billion dollars of NSP funds, the majority of which must be obligated and expended within two years. The Housing and Economic Recovery Act of 2008 (HERA) designated HUD to distribute $3.9 billion in federal funds to states and local entities using the Community Development Block Grant entitlement program that distributes funds annually, by formula, to large communities and states as well as smaller communities and Indian reservations. The HERA funds and distribution are known as the Neighborhood Stabilization Program (NSP) and are meant for the purchase and rehabilitation/development of foreclosed or abandoned homes and residential properties. This program is now referred to as NSP I. The American Recovery and Reinvestment Act of 2009 (ARRA) revised some of the program rules and appropriated an additional $2 billion for the program, to be competitively awarded. The Office of Community Planning and Development decided to use DRGR to track the $2 billion in funding allocated to NSP II, in addition to the $3.9 billion allocated to NSP I.

While we did not find misappropriation or misuse of funds in our limited review, we did find weaknesses that require CPD actions to obtain reasonable assurance that NSP funds are properly safeguarded. We found that (1) access control policies and procedures for DRGR violated HUD policy, (2) the system authorization to operate was outdated and based upon inaccurate and untested documentation, (3) CPD did not adequately separate the DRGR system and security administration functions, and (4) CPD had not sufficiently tested interface transactions between DRGR and the Line of Credit Control System (LOCCS). CPD had identified and initiated actions in an effort to address or mitigate many of the weaknesses identified. We commend CPD’s efforts to identify and remedy the weaknesses in the DRGR system. In addition, we acknowledge that CPD efforts to initiate and proceed with modifications to DRGR have been hampered due to a lack of funding and staff resources. We recommended that CPD complete the actions they have already taken and initiate actions not yet started.


Issue Date: September 30, 2009
Audit Memorandum No.: 2009-NY-0803

Title: HUD Appropriately Conducted the Front-End Risk Assessment for the Public and Indian Housing Capital Fund Formula Grants

The Recovery Act appropriated $4 billion in capital funds to modernize public housing units. The HUD Office of Inspector General evaluated the Department's front-end risk assessment for the program. The evaluation found the Department complied with the Office of Management and Budget’s updated guidance for the American Recovery and Reinvestment Act of 2009 as well as HUD’s streamlined assessment process. Our review determined that the factors of general control environment, risk assessment, control activities, information/communication, and monitoring were adequately addressed and the major program objectives of timeliness, clear and measurable objectives, transparency, monitoring, and reporting were adequately emphasized. As a result, there are no recommendations in this memorandum.


Issue Date: September 30, 2009
Audit Memorandum No.: 2009-AT-1015

Title: The Puerto Rico Public Housing Administration’s Recovery Act Funds Will Inappropriately Supplant Expenditures from Other Sources

The Puerto Rico Public Housing Administration (authority) will receive more than $174 million in Recovery Act assistance for its Capital Fund program to renovate and modernize its public housing developments. HUD's Office of Inspector General (OIG) evaluated the authority's ability to administer the Recovery Act funds. The OIG found the authority inappropriately obligated $32.12 million in Recovery Act funds to supplant expenditures from other nonfederal funds in violation of its annual contributions contract with HUD. This deficiency occurred because the authority substituted the obligations related to nonfederal funds with Recovery Act funds. OIG recommended that HUD:

  • Require the authority to deobligate $31.65 million in Recovery Act funds related to the five contracts awarded before the authorized obligation start date and put the funds to better use.
  • Require the authority to reimburse the capital fund program from nonfederal funds $462,715 paid for ineligible Recovery Act expenditures.
  • Require the authority to implement adequate procedures and controls to ensure that Recovery Act funds are used effectively and efficiently and in accordance with applicable requirements.
  • Take appropriate monitoring measures to ensure that the authority complies with all applicable requirements of the Recovery Act

Issue Date: September 30, 2009
Audit Memorandum No.: 2009-DP-0008

Title: Report on the Review of Recovery Act Management and Reporting System

The HUD Inspector General Office the management procedures, practices, and controls related to the Recovery Act Management and Reporting System (RAMPS) to assess compliance with reporting requirements under the American Recovery and Reinvestment Act (Recovery Act). The audit found that HUD had taken actions to comply with the reporting requirements under the Recovery Act. However, HUD’s effort to implement procedures, practices, and controls related to RAMPS did not fully meet the Recovery Act’s National Environmental Policy Act (NEPA) reporting requirements to ensure that NEPA data were reported to the public in a timely and accurate manner, nor did HUD complete required security and privacy documents before or during the early phase of system development. The report recommends the HUD Chief Information Officer ensure that system owners develop the system security plan and risk assessment early in the development process and that system owners complete a privacy impact assessment for a new system before placing it into development and production.


Issue Date: September 30, 2009
Audit Memorandum No.: 2009-DE-1802

Title: City of Aurora, Colorado Did Not Lack the Capacity to Administer Its Recovery Act Funding

The City of Aurora, Colorado will receive more than $1.6 million in Recovery Act funding to carry out its Homelessness Prevention and Rapid Re-Housing Program and perform additional activities under its Community Development Block Grant program. HUD's Office of Inspector General (OIG) evaluated the City's capacity to administer its Recovery Act funds. The OIG did not find evidence to indicate that the City lacked the capacity to adequately administer its Recovery Act funding.


Issue Date: September 29, 2009
Audit Memorandum No.: 2009-AT-1014

Title: The Housing Authority of the City of Winston-Salem, North Carolina, Needs to Improve Financial Controls

The U.S. Department of Housing and Urban Development (HUD) awarded the Housing Authority of the City of Winston- Salem (Authority) $3.9 million in formula-based capital funds under the American Recovery and Reinvestment Act of 2009 (ARRA). HUD’s Office of Inspector General evaluated the Authority’s capacity to administer these funds. We found that the Authority generally has the capacity to administer these funds but needed to improve some financial controls. Although the Authority properly procured and completed its previous capital fund grants for several years, it failed to adequately document about $2 million in expenditures and incurred $81,869 of ineligible costs. We recommend that HUD increase oversight of the Authority’s administration of ARRA funds and require it to implement appropriate financial policies, procedures, and controls. In addition, the Authority must provide support for more than $2 million in unsupported capital fund disbursements or repay the funds and repay $81,869 in ineligible capital fund expense reimbursements.


Issue Date: September 28, 2009
Audit Memorandum No.: 2009-BO-1803

Title: The City of Brockton, Massachusetts, Had Weaknesses That Could Affect Its Capacity to Administer Its American Recovery and Reinvestment Act Funding

HUD's Office of Inspector General evaluated the City of Brocton's capacity to administer its Neighborhood Stablization Program and the American Recovery and Reinvestment Act funds. The OIG found weaknesses that could significantly affect the City’s capacity to administer these funds and recommended that HUD require corrective action on the deficiencies and perform addtional monitoring of the City's administration of the funds.


Issue Date: September 28, 2009
Audit Memorandum No.: 2009-HA-0801

Title: Evaluation of the Front End Risk Assessment for the Office of Healthy Homes and Lead Hazard Control Recovery Act Funds

We reviewed the front-end risk assessment (assessment) for the Office of Healthy Homes and Lead Hazard Control (OHHLHC) for the U.S. Department of Housing and Urban Development (HUD). The Recovery Act appropriated $100 million to the lead hazard control program. Our review of the assessment for OHHLHC determined that while OHHLHC generally complied with the Recovery Act, HUD’s Streamlined FERA Process and the Departmental Management Control Program handbook, two OHHLHC-specific guides, the Desk Guide and the Program Guide, had not been updated as stated in the final assessment. In addition, we identified two issues regarding transparency that should be addressed to make information available to the public.

We recommend that OHHLHC: (1) Update the Desk Guide and Program Guide to include Recovery Act provisions as presented in the final assessment for OHHLHC, dated June 23, 2009; (2) Establish follow-up procedures to ensure that the selection results are published in the Federal Register in a timely manner; and (3) Ensure that the transparency requirement of the Recovery Act is properly implemented so that Web hyperlinks are properly maintained and available to the public. OHHLHC took action to implement the three recommendations included in the draft memorandum. As such, the recommendations will be closed upon issuance of this memorandum.


Issue Date: September 25, 2009
Audit Memorandum No.: 2009-LA-1021

Title: Review of the City of Eloy, Arizona's capacity to administer Recovery Act funding

The HUD Inspector General performed a capital fund administrative capacity review of the Housing Authority of the City of Eloy (Authority) because, despite the Authority’s persistent management problems, HUD awarded the Authority a Public Housing Capital Fund grant of $113,672 under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Our objective was to determine whether the Authority had sufficient capacity to administer its Recovery Act Public Housing Capital Fund grant in accordance with applicable rules and regulations. We determined the Authority did not, by itself, have the capacity to administer its Recovery Act Public Housing Capital Fund grant in accordance with applicable rules and regulations. HUD’s Office of Public Housing had rated the Authority as troubled for years, and despite intensive technical assistance from HUD, the Authority had been unable to establish sound operational and financial management. As a result, the management of the Authority was in transition as HUD sought to establish an agreement for management assistance between the Authority and another public housing authority. We recommended that HUD seek to establish a management agreement with another housing authority or management entity as soon as possible. We also recommended that HUD require a partnership agreement or contract that would provide additional capacity to manage the Recovery Act grant and that HUD closely monitor all Recovery Act expenditures and deadlines. Without the proposed additional capacity that would be provided by a management agreement and a partnership to administer the Recovery Act projects, the Recovery Act capital fund grant would be at risk for waste, fraud, and abuse.


Issue Date: September 25, 2009
Audit Memorandum No.: 2009-FO-0006

Title: Review of American Recovery and Reinvestment Act Formula Allocations

We performed an audit of the U.S. Department of Housing and Urban Development’s (HUD) formula-based allocations related to five programs funded in the American Recovery and Reinvestment Act of 2009 (Recovery Act) to satisfy the Recovery Act mandate that “every taxpayer dollar spent on economic recovery be subject to unprecedented levels of transparency and accountability.”  We reviewed all five HUD programs with funds which were allocated based on a statutory formula.  The five programs are the (1) Public Housing Capital Fund, (2) Native American Housing Block Grant program, (3) Community Development Fund, (4) HOME Investment Partnerships Program, and (5) Homelessness Prevention Fund.

Our audit found that HUD allocated the $7.96 Billion in formula-based grant funds in accordance with the requirements of the Recovery Act for each of the five programs reviewed and properly calculated the amounts to be distributed to HUD recipients. 

There were no recommendations made in this report.

Issue Date: September 25, 2009
Audit Memorandum No.: 2009-AT-1801

Title: Miami-Dade Public Housing Agency Needs to Strengthen Controls over Its American Recovery and Reinvestment Act Funds

The Miami-Dade Public Housing Agency (Agency) was awarded a $19.3 million capital fund formula grant under the American Recovery and Reinvestment Act of 2009. HUD's Office of Inspector General (OIG) evaluated the Agency's capacity to administer its Recovery Act funds. The OIG found the Agency’s procurement procedures had weaknesses, staffing levels may be inadequate, and the Agency had not properly prioritized its ARRA funded activities. The weaknesses could adversely affect the Agency’s capacity to administer these funds, and the OIG recommended that HUD require corrective action on the deficiencies.


Issue Date: September 25, 2009
Audit Memorandum No.: 2009-AT-1012

Title: The Municipality of Río Grande, Puerto Rico, Lacks the Capacity to Properly Administer Recovery Act Funds

The Municipality of Rio Grande, PR, will receive more than $971,000 in Recovery Act funds for projects to develop low-and moderate-income neighborhoods, and to help homeless persons and families. HUD's Office of Inspector General (OIG) evaluated Rio Grande's ability to administer the Recovery funds. The OIG found weaknesses in the financial management system, lack of controls regarding the creation and preservation of jobs, and lack of written policies and procedures for the administration of the program. OIG recommended that HUD:

  • Require Rio Grande to develop and implement a financial management system that permits the tracing of Recovery Act funds to a level which ensures that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes.
  • Require Rio Grande to develop and implement policies and procedures to ensure that Recovery Act funds are effectively and efficiently used and in accordance with applicable requirements. These policies and procedures should include controls to ensure Rio Grande’s compliance with the creation and preservation of jobs in accordance with the purposes of the Recovery Act.
  • Increase monitoring of Rio Grande’s performance in the administration of its Recovery Act funds.

Issue Date: September 24, 2009
Audit Memorandum No.: 2009-AT-0801

Title: HUD Appropriately Conducted the Front-End Risk Assessment for the Neighborhood Stabilization Program Recovery Act Funds

The Recovery Act includes a $2 billion appropriation for the Neighborhood Stabilization program. The HUD Office of Inspector General evaluated the Department's front-end risk assessment for the program. The evaluation found the Department complied with the Office of Management and Budget’s updated guidance for the American Recovery and Reinvestment Act of 2009 as well as HUD’s streamlined assessment process, except for one issue involving open audit recommendations. Our review determined that the factors of general control environment, risk assessment, control activities, information/communication, and monitoring were adequately addressed and the major program objectives of timeliness, clear and measurable objectives, transparency, monitoring, and reporting were adequately emphasized. As a result, there are no recommendations in this memorandum.


Issue Date: September 24, 2009
Audit Memorandum No.: 2009-FW-0802

Title: HUD Appropriately Conducted the Front-End Risk Assessment for the Community Development Block Grant Program

The Recovery Act appropriated $1 billion in Community Development Block Grant (CDBG) funds to state and local governments to expedite carrying out eligible activities under the CDBG program. The HUD Office of Inspector General evaluated the Department's front-end risk assessment for the program. The evaluation found the Department complied with the Office of Management and Budget’s updated guidance for the American Recovery and Reinvestment Act of 2009 as well as HUD’s streamlined assessment process. Our review determined that the factors of general control environment, risk assessment, control activities, information/communication, and monitoring were adequately addressed and the major program objectives of timeliness, clear and measurable objectives, transparency, monitoring, and reporting were adequately emphasized. As a result, there are no recommendations in this memorandum.


Issue Date: September 24, 2009
Audit Memorandum No.: 2009-DE-1801

Title: Adams County, Colorado Had Weaknesses That Could Affect Its Capacity to Administer Its Recovery Act Funding

Adams County, Colorado will receive more than $1.3 million in Recovery Act funding to carry out its Homelessness Prevention and Rapid Re-Housing Program and to provide additional funding to its Community Development Block Grant (CDBG) program.  HUD's Office of Inspector General (OIG) evaluated the County's capacity to administer its Recovery Act funds. The 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.


Issue Date: September 23, 2009
Audit Memorandum No.: 2009-BO-1802

Title: The City of Boston, Massachusetts, Can Develop the Capacity to Administer Its American Recovery and Reinvestment Act Funding After Correcting Several Weaknesses

HUD's Office of Inspector General evaluated the City of Boston's capacity to administer its American Recovery and Reinvestment Act funds. The OIG found weaknesses that need to be corrected to ensure that the City has the capacity to properly administer these funds and recommended that HUD require corrective action on the deficiencies.


Issue Date: September 23, 2009
Audit Memorandum No.: 2009-PH-1802

Title: Altoona, Pennsylvania Needs to Strengthen Its Capacity to Administer Recovery Act Funds

Altoona, Pennsylvania, will receive $1.3 million in Recovery Act funding for community development and homeless prevention and housing programs. Because the City has had trouble managing grants funded with non-Recovery money, HUD’s Office of Inspector General (OIG) evaluated Altoona’s ability to administer its Recovery Act funds. The OIG found several weaknesses and recommended that HUD require the City to: implement controls to ensure Recovery Act activities are supported and meet eligibility requirements; update its written monitoring procedures for all subrecipients to ensure accountability and transparency of Recovery Act funds; and evaluate its staffing and consider hiring additional staff to administer the funds.


Issue Date: September 23, 2009
Audit Memorandum No.: 2009-PH-0802

Title: HUD Appropriately Conducted the Front-End Risk Assessment for the Tax Credit Assistance Program

The Recovery Act appropriated $2.25 billion to provide funds for capital investments in low-income housing tax credits projects. The HUD Office of Inspector General evaluated the Department's front-end risk assessment for the program. The evaluation found the Department complied with the Office of Management and Budget’s updated guidance for the American Recovery and Reinvestment Act of 2009 as well as HUD’s streamlined assessment process. Our review determined that the factors of general control environment, risk assessment, control activities, information/communication, and monitoring were adequately addressed and the major program objectives of timeliness, clear and measurable objectives, transparency, monitoring, and reporting were adequately emphasized. As a result, there are no recommendations in this memorandum.


Issue Date: September 21, 2009
Audit Memorandum No.: 2009-SE-1803

Title: Review of Warm Springs Housing Authority's capacity to administer Recovery Act funding

The HUD Office of Inspector General conducted a capacity review of Warm Springs Housing Authority’s (Authority) operations to determine whether the Authority has the capacity to adequately administer Recovery Act funding. Our limited review found no evidence indicating the Authority lacks the capacity to administer its Recovery Act funding. However, we are concerned that the authority's accomplishments will not be sustained without a commitment to future management and to the continued improvement of its internal control environment. A qualified executive director and a functional board of commissioners are necessary to establish the organization's internal control environment; its integrity and ethical values; its commitment to competence; and its framework for planning, directing, and controlling operations. We recommended that the Northwest Office of Native American Programs staff provide technical assistance to and monitor the progress of the Authority’s activities and to request the tribal council hire an executive director and appoint qualified members to the board of commissioners.


Issue Date: September 18, 2009
Audit Memorandum No.: 2009-KC-1801

Title: The East St. Louis Housing Authority Had Weaknesses That Could Affect Its Capacity to Administer Its Recovery Act Funding

The East St. Louis Housing Authority will receive $4.9 million in Recovery Act funding to carry out capital and management activities at its public housing developments.  HUD's Office of Inspector General (OIG) evaluated the Authority's capacity to administer its Recovery Act funds. The OIG found several weaknesses that could adversely affect its capacity to administer these funds and recommended that HUD require corrective action on the deficiencies.


Issue Date: September 17, 2009
Audit Memorandum No.: 2009-CH-1802

Title: Cook County, Illinois, Needs to Improve Its Capacity to Effectively and Efficiently Administer Its Neighborhood Stabilization Program

The U.S. Department of Housing and Urban Development's Office of Inspector reviewed Cook County’s (County) Neighborhood Stabilization Program. The review was part of the activities in our fiscal year 2009 annual audit plan. We selected the County based upon the results of our three previous audits of the County’s HOME Investment Partnerships Program (HOME). Our objective was to determine whether the County had the capacity to effectively and efficiently administer its Neighborhood Stabilization Program. Congress amended the Neighborhood Stabilization Program and increased its funding as part of the American Recovery and Reinvestment Act of 2009 (Recovery Act). The County, as part of a consortium, submitted an application to HUD, dated July 14, 2009, which totaled more than $75 million in additional Neighborhood Stabilization Program funds under the Recovery Act. We found that the County needs to improve its capacity to effectively and efficiently administer its Neighborhood Stabilization Program since it had not established sufficient policies, procedures, and controls for its Program as of September 9, 2009. Further, the County should have sufficient staff to administer its Neighborhood Stabilization Program if it implements the revised staffing plan and budget provided to us on August 5, 2009; hires individuals with experience in the planned activities; and provides adequate training. Lastly, we found that HUD’s Chicago Office of Community Planning and Development did not include special conditions in its Neighborhood Stabilization Program grant agreement with the County.


Issue Date: September 14, 2009
Audit Memorandum No.: 2009-CH-0801

Title: Evaluation of the Final Front-End Risk Assessment of the American Recovery and Reinvestment Act of 2009's Green Retrofit Program for Multifamily Housing

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General reviewed the front-end risk assessment (assessment) of the Green Retrofit Program (program) for Multifamily Housing for HUD. Our objective was to determine whether the assessment complied with the Office of Management and Budget’s guidance for the American Recovery and Reinvestment Act of 2009 (Recovery Act); the Recovery Act’s Updated Implementing Guidance; and HUD’s streamlined assessment process. Our review of the final assessment for the program determined that it generally complied with the Office of Management and Budget’s guidance for the Recovery Act, the Recovery Act’s Updated Implementing Guidance, and HUD’s streamlined assessment process. Of the 11 factors evaluated in the assessment, none was found to be high risk, four were assessed as medium risk, and seven were assessed as low risk. The assessment’s risk assessment chart adequately addressed planned actions for the four factors assessed as medium risk. Overall, the factors identified above had the major program objectives sufficiently emphasized in the assessment. As a result, there are no recommendations in this memorandum.


Issue Date: September 2, 2009
Audit Memorandum No.: 2009-LA-1017

Title: Review of the Los Angeles County Community Development Commission's Capacity to Administer Neighborhood Stabilization Program Funding

The HUD Office of the Inspector General conducted a capacity review of the Los Angeles County Community Development Commission’s (County) Neighborhood Stabilization Program. HUD awarded the County $16.8 million in Neighborhood Stabilization Program funds under the Housing and Economic Recovery Act. Our objective was to determine whether the County had sufficient capacity and the necessary controls to manage and administer the Neighborhood Stabilization Program. We found no evidence indicating that the County lacked the capacity to adequately administer its current Neighborhood Stabilization Program funding. The County applied for additional funding under the American Recovery and Reinvestment Act of 2009 to continue its Neighborhood Stabilization Program activities and based on our review, its procedures and controls should be adequate to administer the continuation of the program.


Issue Date: August 31, 2009
Audit Memorandum No.: 2009-FW-1802

Title: The City of Fort Worth Needs to Strengthen Its Capacity to Adequately Administer Recovery Funding

The City of Fort Worth (City) is scheduled to receive $10.85 million in Recovery Act funding.  The Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) issued a memorandum on the City’s capacity to administer these funds.  We reported the City had a history of failing to meet regulatory requirements in an efficient or timely manner.   The City needs to strengthen its capacity to adequately administer recovery funding to include improving its procurement activities and undertaking only prudent projects.  We recommend 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.


Issue Date: August 28, 2009
Audit Memorandum No.: 2009-PH-1801

Title: City of Bethlehem, Pennsylvania, Had the Capacity to Effectively Administer Community Planning and Development Funds Provided under the Recovery Act

On March 6, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the City $1.1 million under the Recovery Act for its community planning and development program. The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes. Our objective was to determine whether the City had the capacity to effectively administer its community planning and development funds provided under the Recovery Act according to applicable requirements. We concluded that the City had the capacity to effectively administer community planning and development funds provided to it under the Recovery Act according to the applicable requirements.


Issue Date: August 17, 2009
Audit Memorandum No.: 2009-BO-0801

Title: Evaluation of the Front-End Risk Analysis for the Homelessness Prevention and Rapid Re-Housing Program and its Compliance with the Requirements of the American Recovery and Reinvestment Act of 2009

For the U.S. Department of Housing and Urban Development’s front-end risk assessment (FERA) for the new Homelessness Prevention and Rapid Re-Housing program (HPRP), we determined whether the FERA complied with the Office of Management and Budget’s guidance for the American Recovery and Reinvestment Act of 2009 (Recovery Act); the Recovery Act’s streamlined FERA process; and HUD Handbook 1840.1, REV-3, Departmental Management Control Program. The review disclosed that for each factor, the risk was identified, planned action needed was identified, and mitigation techniques used to base its risk rating was disclosed. Our review also has determined that the factors of: general control environment, risk assessment, control activities, information/communication, and monitoring have been adequately addressed; and the major program objectives of timeliness, clear and measurable objectives, transparency, monitoring, and reporting were adequately emphasized.


Issue Date: August 17, 2009
Audit Memorandum No.: 2009-FW-1801

Title: Travis County Housing Authority Lacks Capacity to Administer American Recovery and Reinvestment Act Housing Capital Funds

The HUD Office of Inspector General issued a Memorandum noting the Travis County Texas Housing Authority lacked the capacity to administer $182,074 recovery act funds for capital improvements. The memorandum recommends HUD increase its monitoring and oversight of the Authority and place it under a reimbursement basis.


Issue Date: August 7, 2009
Audit Report No.: 2009-BO-1010

Title: The City of New London Housing Authority Lacks the Capacity to Properly Administer its Capital Fund Program and Recovery Act Fund

We audited the City of New London, Connecticut, Housing Authority (the Authority) to evaluate its capability to administer the capital funds provided under the American Recovery and Reinvestment Act of 2009 (The Recovery Act). The Authority has not properly administered its Capital Fund program and lacks adequate capacity to administer Recovery Act funding for its Capital Fund program in accordance with HUD requirements and the Recovery Act. We are recommending that the Deputy Assistant for Field Operations inform the Assistant Secretary for Public and Indian Housing of the Authority’s inability to improve. We are also recommending that the Director of HUD’s Boston Office of Public Housing fully implement its strategy for troubled public housing authorities and ensure the Authority properly expends and accounts for its Capital Funds received under the Recovery Act.


Issue Date: July 29, 2009
Audit Memorandum No.: 2009-CH-1801

Title: The City of Cincinnati, Ohio, Lacked Sufficient Capacity to Effectively and Efficiently Administer Its Neighborhood Stabilization Program

The U.S. Department of Housing and Urban Development's Office of Inspector General audited the City of Cincinnati’s (City) Neighborhood Stabilization Program. The audit was part of the activities in our fiscal year 2009 annual audit plan. We selected the City based upon the results of our three previous audits of the City’s HOME Investment Partnership Program (HOME). Our objective was to determine whether the City had the capacity to effectively and efficiently administer its Neighborhood Stabilization Program. This report was amended and reissued to clarify that the City applied as part of a consortium for additional funding under the Neighborhood Reinvestment Program amendments enacted as part of the American Recovery and Reinvestment Act of 2009.

The City did not have sufficient capacity to effectively and efficiently administer its Neighborhood Stabilization Program. It lacked adequate policies, procedures, and controls to ensure that Neighborhood Stabilization Program funds are used effectively and efficiently and in accordance with applicable requirements. Further, the City did not have sufficient staff to assist in administering the Neighborhood Stabilization Program to ensure that it has sufficient capacity to effectively and efficiently administer program funds. Lastly, we found that HUD’s Columbus Office of Community Planning and Development did not include special conditions in its Neighborhood Stabilization Program grant agreement with the City.

We recommend that the Director of HUD’s Columbus Office of Community Planning and Development require the City to: (1) implement adequate policies, procedures, and controls to ensure that Neighborhood Stabilization Program funds are used effectively and efficiently and in accordance with applicable requirements; and (2) hire additional staff and/or contract with another organization to assist in administering the Neighborhood Stabilization Program to ensure that it has sufficient capacity to effectively and efficiently administer program funds. This may require the City to revise its budget by reallocating planning and administrative costs that could be directly charged to Neighborhood Stabilization Program activities as delivery costs to the specific activity costs within the budget and/or reorganize its staff.

We also recommend that the Director of HUD’s Columbus Office of Community Planning and Development include special conditions in its Neighborhood Stabilization Program grant agreement with the City. The special conditions should include but not be limited to (1) requiring the City to submit documentation describing how past HOME program performance issues were resolved or are now being resolved and explain whether they will impact the administration of the Neighborhood Stabilization Program, (2) performing additional monitoring, and (3) providing technical assistance to the City.


Issue Date: July 24, 2009
Audit Memorandum No.: 2009-NY-0802

Title: Significant Flaws Identified at the Lackawanna Municipal Housing Authority may affect its Capacity to Administer American Recovery and Reinvestment Act Funds

The Office of the Inspector General for the Department of Housing and Urban Development (HUD) has conducted an audit to determine whether the Lackawanna Municipal Housing Authority is disbursing capital funds and procuring contracts in accordance with HUD requirements. The audit raised an issue of concern related to the Authority's procurement procedures that may affect its capacity to fairly and reasonably administer its capital fund program in light of its receiving an additional $1.5 million in capital funds under the American Recovery and Reinvestment Act of 2009.


Issue Date: June 25, 2009
Audit Report No.: 2009-FW-0001

Title: HUD's Disaster Recovery Grant Reporting System Can Collect the Basic Information Needed to Monitor the Neighborhood Stabilization Program (Amended Report)

As part of the our plan to review the Neighborhood Stabilization Program (program), we reviewed whether the U. S. Department of Housing and Urban Development’s (HUD) Disaster Recovery Grant Reporting system (DRGR) can collect program data at the level of detail necessary to adequately monitor the program.  We limited the review to the program established by the Housing and Economic Recovery Act of 2008.  However, HUD will also use DRGR for the American Recovery and Reinvestment Act of 2009.  Thus, at the request of the Recovery Act Transparency and Accountability Board, we issued an amended report to clarify the relationship between DRGR and the American Recovery and Reinvestment Act of 2009.

As designed, DRGR can collect the basic information that HUD needs to monitor the program.  HUD was in the process of developing monitoring guidance for field staff that separately addresses on-site monitoring and review of grantees’ DRGR action plans and quarterly performance reports.  HUD needs to ensure its monitoring guidance includes critically reviewing grantee reports to identify potential noncompliance issues, including unreported program income.  HUD has an opportunity to do more with data collection and analysis, particularly with additional recovery programs and the associated transparency and reporting requirements.  However, HUD should not substitute data collection for aggressive monitoring.

We recommended that the General Deputy Assistant Secretary for Community Planning and Development (1) continue to develop and implement detailed on-site monitoring guidance that incorporates information in DRGR, (2) continue to develop and implement detailed guidance requiring field staff to aggressively review grantee quarterly performance reports and drawdown vouchers, (3) require grantees to include the addresses of properties assisted under the program in quarterly performance reports, and (4) consider adding data fields to DRGR that require grantees to report compliance-related information.

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