Florida Audit Reports

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Issue Date: October 25, 2010
Audit Report No.: 2011-AT-1001
File Size: 413KB

Title: Nationwide Home Loans, Miami, FL, Did Not Follow HUD Requirements in Approving FHA Loans and Implementing Its Quality Control Program

HUD OIG performed an audit of Nationwide Home Loans, Inc. (Nationwide), a Federal Housing Administration (FHA) approved direct endorsement lender located in Miami, Florida. The review was performed based on the lender's high default rates. The purpose of the audit was to determine whether the lender followed the U.S. Department of Housing and Urban Development's (HUD) requirements when (1) originating and underwriting loans and (2) implementing its quality control program.

Nationwide did not follow HUD requirements when it used at least 16 various independent loan officers to originate 41 loans underwritten in the Miami HUD area in 2009. These 16 loan officers were also employed by or owned businesses involved with mortgage lending or other related fields such as real estate sales and mortgage processing. As a result, Nationwide approved loans that were not eligible for FHA insurance and increased the risk to the FHA insurance fund by more than $4 million.

In addition, Nationwide did not follow HUD requirements when originating and underwriting loans for FHA insurance. It used inaccurate and unsupported information to qualify borrowers for five of six FHA loans reviewed. As a result, Nationwide approved loans that did not qualify for FHA insurance and unnecessarily placed the FHA insurance fund at risk for almost $1 million.

Lastly, Nationwide did not implement a quality control program that complied with HUD requirements. It did not conduct quality control reviews in compliance with requirements, and its written quality control plan did not contain the required provisions. As a result, Nationwide increased the risk to the FHA insurance fund because it did not have assurance regarding the accuracy, validity, and completeness of its loan origination and underwriting operations.

OIG recommended that the Deputy Assistant Secretary for Single Family Housing require Nationwide to indemnify HUD for the 46 ineligible FHA loans with an estimated potential loss of $5 million. OIG also recommended that Nationwide be referred to the Mortgagee Review Board for consideration of imposing civil money penalties for the ineligible loans and taking appropriate administrative actions against the individuals and entities responsible. Finally, OIG recommended that Nationwide develop, implement, and enforce (1) written controls to ensure that loans are originated and underwritten in accordance with HUD requirements and (2) a quality control program that complies with HUD requirements.

Issue Date: September 29, 2010
Audit Report No.: 2010-AT-1015
File Size: 2MB

Title: The City of Deerfield Beach, FL, Did Not Properly Administer Its Community Development Block Grant Program

HUD OIG audited the Community Development Block Grant program (program) administered by the City of Deerfield Beach, FL (City). The objective of the audit was to determine whether the City administered its program in accordance with applicable U.S. Department of Housing and Urban Development (HUD requirements. We selected the City for review because it had come under increased scrutiny when various newspaper articles and reviews highlighted City problems. In addition, HUD's 2010 risk assessment indicated that the City had demonstrated a record of poor performance with the program.

The City did not administer its program in accordance with applicable HUD requirements. It did not request exception to HUD's conflict-of-interest provision before the awarding of funds. This condition occurred because the City lacked effective management controls to ensure compliance with HUD's conflict-of- interest regulation. As a result, HUD had no assurance that the City did not practice favoritism in the awarding of funds and may have placed HUD's funds at risk.

The City did not maintain adequate supporting documentation to demonstrate that it properly allocated salaries to the program. This condition occurred because the City did not have effective controls in place to ensure that salary allocations were properly documented. Without supporting documentation to substantiate the allocation of actual services performed by personnel, there was no assurance that the salary expenditures were accurate and program related.

The City did not comply with HUD requirements in meeting the national objective for its housing activities. It did not maintain adequate supporting documentation to demonstrate that the individuals served were low- and moderate-income persons. This condition occurred because the City lacked effective management controls and disregarded HUD requirements. As a result, there was no assurance that expended program funds achieved the intended national objective.

OIG recommends that the Director of the Miami Office of Community Planning and Development require the City to (1) reimburse $224,742 in HUD funds from non-Federal funds for ineligible costs, (2) provide supporting documentation or reimburse its program $142,248 from non-Federal funds for unsupported salary expenditures, and (3) provide supporting documentation or reimburse its program $28,298 from non-Federal funds for an activity in which the national objective was unsupported.

Issue Date: September 28, 2010
Audit Report No.: 2010-AT-1014
File Size: 2MB

Title: Polk County, FL, Did Not Comply With Procurement and Contract Requirements in Its NSP and HOME Program

HUD OIG conducted this audit based on a confidential complaint submitted through the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) hotline. The complaint alleged several improprieties involving the County's NSP and HOME programs. Our objectives were to determine whether the County (1) complied with requirements in the procurement, award, and execution of its NSP administrative contract and (2) incurred reasonable and eligible NSP and HOME expenditures for administrative and construction contract services.

While implementing its NSP the County did not comply with requirements that governed procurements, safeguard of assets, and accurate reporting of NSP obligations. The number and significance of the procurement violations brings into question the County's capacity to implement future NSP activities in accordance with competitive contracting requirements. The County also did not take proper actions to protect the ownership of abandoned and foreclosed-upon properties acquired with NSP funds or the revenues expected from their disposition. The violations put more than $6.1 million at risk because the County allowed a nonprofit entity, with whom it had no contract, to acquire abandoned and foreclosed-upon properties in its name without title restrictions and sell the properties. In addition, the County did not accurately report NSP acquisition obligations in HUD's Disaster Recovery Grants Reporting (DRGR) system and did not post NSP performance reports to its Web page in a timely manner.

While implementing its HOME program, the County did not require its community housing development organization (CHDO) to comply with its contract that required it to obtain competitive bids for procurements. As a result, the CHDO did not have documentation to support the reasonableness of more than $1.2 million in construction contract costs examined during the review. We used an OIG staff appraiser to review a sample of the construction costs, and we determined that the costs were reasonable. However, the violations reflected a lack of attention by County and CHDO officials to their obligation to enforce contract procurement requirements for construction costs paid with HOME funds.

OIG recommends that HUD require the County to terminate its NSP administrative contract and arrange for the continued administration and implementation of its NSP by County staff or a properly procured contractor; reimburse the NSP more than $4.4 million if title to NSP acquired properties is not transfered to the County or an entity with the legal authority to hold the titles; establish proper safeguards over its NSP funds; and reimburse more than $98,000 for questionable fees. We also recommend that HUD review and determine the accuracy of NSP obligations made after the completion of our on-site review and ensure that the County post its quarterly NSP performance reports to its Web page; and ensure that that its CHDO comply with procurement requirements.

Issue Date: July 30, 2010
Audit Report No.: 2010-AT-1008
File Size: 1MB

Title: Polk County, FL, Entered Incorrect Commitments Into HUD's Integrated Disbursement and Information System for Its HOME Program

We conducted this audit because the County was one of several participating jurisdictions visited during a 2009 internal audit of HOME commitments (audit report number 2009-AT-0001, issued September 28, 2009). During the internal audit, we determined that the County entered incorrect commitments into HUD's information system. Our objective for this audit was to determine the extent of the incorrect HOME commitments that the County entered into the information system and the impact of the incorrect entries, including those identified during the internal audit.

The audit identified more than $1.6 million in incorrect commitment entries that the County made to HUD's information system. The incorrect entries masked a shortfall of more than $400,000 that is subject to recapture by HUD. The incorrect commitments occurred because County staff did not follow and enforce HUD program requirements or implement adequate controls to monitor the accuracy of HOME commitments.

In addition, the County improperly executed agreements for its HOME-funded tenant-based rental assistance activities that obligated Section 8 funds to pay the costs, although the County used HOME funds to make the assistance payments. The Section 8 contracts did not legally support the commitment of HOME funds. This condition occurred because County management failed to ensure that the contracts were properly drafted to commit HOME funds for its tenant-based rental assistance program.

We recommend that the Director of HUD's Jacksonville Office of Community Planning and Development (1) recapture $400,776 in HOME funds not committed by the County's October 31, 2008, deadline compliance date, (2) require the County to implement controls to ensure that future HOME funds are committed by the required deadline, monitor commitments entered into HUD's information system, and take appropriate action to promptly correct detected violations, and (3) require the County to prepare a proper legal contract template for its HOME-funded tenant-based rental assistance activities and use that contract template for all future HOME funds committed to those activities.

Issue Date: May 20, 2010
Audit Report No.: 2010-AT-1005
File Size: 519KB

Title: Lendamerica Home Loans, Coral Gables, FL, Did Not Follow HUD Requirements in Originating Loans and Implementing Its Quality Control Program

HUD OIG performed an audit of Lendamerica Home Loans, Inc., a Federal Housing Administration approved direct endorsement lender located in Coral Gables, Florida. The review was performed based on the lender's high default rates. The purpose of the audit was to determine whether the lender followed the U.S. Department of Housing and Urban Development's (HUD) requirements for (1) originating and underwriting loans and (2) implementing its quality control program. Lendamerica Home Loans did not follow HUD requirements when underwriting all five loans reviewed. HUD insured five loans that unnecessarily placed the FHA insurance fund at risk for more than $1 million.

Lendamerica Home Loans did not ensure the accuracy, validity, and completeness of its loan originations. In addition, Lendamerica Home Loans did not implement a quality control program that complied with HUD requirements. As a result, the effectiveness of Lendamerica's quality control program to guard against errors, omissions, and fraud and to protect HUD from unacceptable risk was diminished. In addition, the noncompliance could result in an increased risk to the FHA insurance fund.

OIG recommended that the Deputy Assistant Secretary for Single Family Housing require Lendamerica Home Loans to indemnify HUD more than $1 million for the five insured loans with significant deficiencies, pay down the loan balance for the two overinsured loans, and implement and enforce controls to ensure that loans are processed in accordance with HUD requirements. OIG also recommended that HUD take appropriate measures to ensure that Lendamerica develops and implements a quality control program that complies with HUD requirements and refer it to the Mortgagee Review Board for consideration of taking appropriate administrative actions.

Issue Date: March 31, 2010
Audit ReportNo.: 2010-AT-1002
File Size: 2MB

Title: Broward County, FL, Needs To Strengthen Controls Over Its Neighborhood Stabilization Program

HUD OIG audited the Neighborhood Stabilization Program (Program) administered by Broward County, Florida (County). The objective was to determine whether the County had the necessary controls to administer its Program in accordance with the Housing and Economic Recovery Act of 2008. Specifically, we evaluated whether the County had adequate (1) management controls to ensure that activities met Program objectives and (2) financial controls to ensure that obligations were timely and valid and expenditures were allowable and properly reported.

The County had (1) adequate management controls to ensure that activities met Program objectives and (2) adequate financial controls to ensure that obligations were timely and valid and expenditures were allowable. However, it needs to strengthen some controls over its Program. The County did not accurately report Program financial information to the U.S. Department of Housing and Urban Development (HUD) and incorrectly posted Program expenditures to the wrong fiscal year in its financial management system. As a result, HUD has no assurance of the County's actual financial progress of its Program and the County overstated its obligation and expenditures in its financial management system. In addition, it did not post first and second quarter Program performance reports to its Web site in a timely manner. Thus, the citizens of Broward County were not informed in a timely manner regarding the use of Program funds.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the County to (1) establish controls to reconcile Program obligations and expenditures between HUD's Disaster Recovery Grant Reporting system (system) and the County's financial management system, (2) strengthen controls to ensure that all Program activities are properly reported in HUD's system and their financial management system on a timely basis, and (3) post its Program quarterly performance reports on its Web site in a timely manner.

Issue Date December 18, 2009
Audit Memorandum No.: 2010-AT-1803
File Size: 662.31KB

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

We reviewed the County because it received more than $19 million in NSP funds and in 2008, HUD rated the County's HOME program as high risk. Our objectives were to determine whether the County had the capacity to effectively and efficiently administer its NSP 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: November 20, 2009
Audit Memorandum No.: 2010-AT-1801
File Size: 468.98KB

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. 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: September 25, 2009
Audit Report No.: 2009-AT-1801
File Size: 559.18KB

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: August 18, 2009
Audit Report No.: 2009-AT-1011
File Size: 673.67

Title: The City of Miami, Florida, Did Not Properly Administer Its Community Development Block Grant Program

HUD OIG audited the Community Development Block Grant (CDBG) program administered by the City of Miami, Florida (City). The objective of the audit was to determine whether the City administered its CDBG program in accordance with applicable U.S. Department of Housing and Urban Development (HUD) requirements.

The City did not administer its CDBG program in accordance with applicable HUD requirements. It did not comply with HUD requirements in meeting national objectives for its commercial façade program. As a result, it had no assurance that more than $4.1 million in expended CDBG funds achieved the intended national objective or met program requirements. In addition, the City did not properly allocate salary expenditures to its CDBG program and did not maintain adequate supporting documentation demonstrating that employees worked in the program. As a result, the City improperly allocated $690,392 to the program. The City also did not accurately report CDBG financial information to HUD in accordance with federal requirements. It inaccurately reported administrative/planning costs for program year 2006 and failed to report $265,823 in reprogrammed CDBG funds to HUD. As a result, there was a lack of assurance that the City reported accurate CDBG financial information to HUD in accordance with HUD regulations.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the City to (1) provide documentation to support that CDBG program requirements were followed and the intended national objective was met for two commercial façade activities or reimburse its program more than $4.1 million from nonfederal funds, (2) reimburse its program $690,392 from nonfederal funds for unsupported salary expenditures, and (3) provide documentation to support the reprogrammed funds or reimburse its program $265,823 from nonfederal funds for canceled CDBG activities for which funds were reprogrammed.

Issue Date: June 19, 2009
Audit Report No.: 2009-AT-1008
File Size: 472.38KB

Title: Miami-Dade County, Florida, Did Not Properly Administer Its Community Development Block Grant Program

HUD-OIG audited the Community Development Block Grant (CDBG) program administered by Miami-Dade County, Florida (County). The objective of the audit was to determine whether the County administered its CDBG program in accordance with applicable U.S. Department of Housing and Urban Development (HUD) requirements.

The County did not administer its CDBG program in accordance with applicable HUD requirements. It did not comply with HUD requirements in meeting national objectives and performance goals and failed to recapture CDBG funds for canceled activities that did not meet a national objective. As a result, it had no assurance that more than $4.6 million in expended CDBG funds achieved the intended national objective or met program requirements. In addition, the County also did not accurately report CDBG financial and program information to HUD in accordance with federal requirements. It failed to report CDBG program income for four activities, inaccurately reported program income for 2007, and reported inaccurate status and accomplishments of CDBG activities to HUD. As a result, there is a lack of assurance that the County reported accurate CDBG financial and program information to HUD.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the County to (1) provide documentation to support that CDBG program requirements were followed and national objectives and performance goals were met for eight activities or reimburse its program $4 million from nonfederal funds, and (2) recapture $649,143 expended for eight activities that had been canceled. In addition, the Director should require the County to (1) ensure that CDBG program income is properly reported for four activities, and (2) implement and enforce written policies and procedures to ensure effective performance and compliance with HUD regulations for meeting CDBG national objectives and performance goals and reporting program information and income to HUD.

Issue Date: September 18, 2008
Audit Report No.: 2008-AT-1013
File Size:743.11KB

Title: Bethany Housing, Inc., South Pasadena, Florida, Did Not Conduct Proper Oversight of Project Operations Resulting Financial Harm to the Project

We audited Bethany Towers Apartments as part of our annual goal for auditing multifamily projects and in response to a request from the U.S. Department of Housing and Urban Development's (HUD) Tampa, Florida, Multifamily Division. We focused the audit on the nonprofit owner's and management agents' compliance with the project's regulatory agreement, applicable laws, and other HUD requirements pertaining to the sale and transfer of ownership interest in the project, use of project assets, identity-of-interest relationships, necessity and reasonableness of project costs, and record keeping.

The owner and its undisclosed identity-of-interest (IOI) management agent did not provide proper oversight and management of the project's financial affairs. The owner executed an unauthorized agreement to sell the project, diverted $90,000 in funds paid towards the purchase to its church sponsor, selected an undisclosed IOI management agent, allowed financial harm to the project from IOI dealings, incurred more than $16,000 in ineligible/improperly supported costs, and maintained inadequate books and records.

We recommend that the Director of HUD's Jacksonville Multifamily Housing Hub (a) determine whether to declare the project in technical default of its regulatory agreement and initiate foreclosure proceedings, require the owner to repay or support more than $106,000 in questioned costs, which include the diverted funds, and require the owner to establish and implement policies and procedures to ensure compliance with HUD requirements. We also recommend that the Acting Director of the Departmental Enforcement Center take appropriate administrative action against the owner and its IOI agent for the most significant reported violations and that HUD's Regional Counsel, in coordination with HUD's Director, Jacksonville Multifamily Housing Hub, and HUD's Office of Inspector General, seek double damages against the owner for diverting $90,000 received for the purchase of the project.

Issue Date: September 17, 2008
Audit Report No.: 2008-AT-0004
File Size:1.22MB

Title: The Miami-Dade Housing Agency, Miami, Florida, Did Not Maintain Adequate Controls over Capital Fund Program Drawndowns

HUD-OIG audited the Miami Dade Housing Agency (Agency) capital fund program. The objective of the audit was to determine whether the Agency used capital fund program drawdowns in accordance with U.S. Department of Housing and Urban Development (HUD) requirements. The Agency did not use capital fund program drawdowns in accordance with HUD requirements.

The Agency's internal controls over capital fund program drawdowns from HUD were inadequate. The Agency drew down $257,253 to close out the 2003 capital fund program grant using the same expenses it used for previous drawdowns. The Agency also drew down from its 2007 capital fund program grant $283,168 more than was supported by expenses. These conditions occurred because the Agency did not have effective controls in place to identify and track excess funds that needed to be returned. As a result, we have no assurance that $540,421 in excess funds was repaid. Further, the Agency used capital fund program drawdowns to reimburse itself for ineligible and unsupported expenses.The Agency was reimbursed from capital funds for $62,123 that was used for public housing operations and $127,593 that it could not support was used for capital fund activities. It was also unable to provide documentation to support $257,694 in expenses transferred to the 2007 capital fund program grant that had not been reimbursed. These conditions occurred because the Agency did not have effective internal controls in place to ensure that capital funds were used in accordance with HUD requirements. As a result, we consider $62,123 to be ineligible costs, $127,593 to be unsupported costs, and $257,694 to be funds that could be put to better use, since the Agency had not been reimbursed for these expenses.

OIG recommended that HUD require the Agency to (1) provide supporting documentation showing that the $257,253 excess drawdown was returned to the program or reimburse HUD from nonfederal funds, (2) provide supporting documentation for the $283,168 in expenses for the 2007 capital fund program grant or reimburse the capital fund program from nonfederal funds, and (3) define the roles and responsibilities of its accountants for the monthly reconciliation of capital fund program grants to HUD records and monitor capital fund drawdowns and excess capital funds. We also recommend that HUD determine and place appropriate restrictions on the Agency's ability to draw down capital funds. In addition, HUD should require the Agency to (1) reimburse HUD $62,123, (2) provide supporting documentation for $127,593 that it could not support was for capital fund activities and $257,694 transferred to the 2007 capital fund program, and (3) implement and enforce policies and procedures to improve controls over the program.

Issue Date: September 5, 2008
Audit Report No.: 2008-AT-1012
File Size: 443.78KB

Title: The City of Jacksonville, Florida, Lacked Adequate Controls over Its HOME Program

We audited the City of Jacksonville/Duval County's (City) HOME Investment Partnerships Program (HOME) as part of our annual audit plan. We selected the City because it had the largest funded program in northern Florida and other risk factors. Our audit objectives were to determine whether the City administered its HOME program in accordance with the U.S. Department of Housing and Urban Development's (HUD) requirements concerning the (1) eligibility of cost and affordable housing for three foreclosed multifamily rental rehabilitation projects, (2) commitment of program funds, and (3) five-year expenditure.

The City did not comply with program requirements for affordability/eligibility of three foreclosed multifamily rental rehabilitation projects and record keeping. The audit identified more than $2.7 million in questioned costs that were subject to repayment for violation of requirements. The City also had not established and maintained an adequate system for filing and retrieving program records. The violations occurred because City management and staff did not follow and enforce program requirements. The review did not identify any reportable violations concerning the City's compliance with the HOME program's commitment and five-year expenditure requirements.

We recommended that the Director of HUD's Jacksonville Office of Community Planning and Development require the City to reimburse more than $2.7 million in funds approved for three foreclosed multifamily rental rehabilitation projects that did not accomplish the program's affordability requirement or meet other program eligibility requirements. We also recommend that the Director require the City to take appropriate actions to ensure management and staff follow program requirements for approval and oversight of multifamily rental rehabilitation activities and improve its system for filing and maintaining program records.

Issue Date: January 11, 2008
Audit Report No.: 2008-AT-1005
File Size:4.44MB

Title: The City of Fort Lauderdale, Florida, Did Not Properly Administer Its Community Development Block Grant Program

HUD OIG audited the Community Development Block Grant (CDBG) program administered by the City of Fort Lauderdale, Florida (City). The objective of the audit was to determine whether the City administered its CDBG program in accordance with applicable U.S. Department of Housing and Urban Development (HUD) requirements. The City did not administer its CDBG program in accordance with applicable HUD requirements.

It did not provide supporting documentation or did not maintain adequate supporting documentation to demonstrate that CDBG activities met national objectives. As a result, it had no assurance that more than $5 million in expended CDBG funds achieved the intended national objective or met program requirements. In addition, the City's CDBG financial information in its Financial Accounting Management Information System did not agree with financial information reported to HUD. The City also failed to report CDBG program income to HUD for one project. As a result, there is no assurance that the City reported accurate CDBG financial information to HUD in accordance with HUD regulations. Finally, the City improperly allocated 100 percent of its vehicle expenditures to the CDBG program without adequate supporting documentation demonstrating the use of the vehicles. As a result, there is no assurance that $98,967 in vehicle expenses allocated to the CDBG program was accurate and CDBG program related.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the City to (1) provide documentation to support that CDBG program requirements were followed and national objectives were met for the 20 public facility activities and 11 public service activities or reimburse its program $2.3 million from nonfederal funds; (2) provide an action plan for development of land parcels to include how national objectives will be achieved and if not developed within 90 days, reimburse its program the greater of $2.6 million or the fair market value of the property from nonfederal funds; (3) maintain supporting documentation that CDBG program requirements were followed and national objectives were met for the 20 public facility activities and 11 public service activities according to 24 CFR 570.506 to allow $722,377 in unused funds to be put to better use by ensuring that the City effectively uses these funds for the intended clientele; and (4) update, implement, and enforce written monitoring policies and procedures to ensure effective performance and compliance with federal regulations for meeting CDBG national objectives. The Director should also require the City to (1) reconcile its Financial Accounting Management Information System with the HUD Integrated Disbursement and Information System and notify HUD of the adjustments and (2) report rental and interest income for one project as CDBG program income. In addition, the Director should require the City to reimburse the program $98,967 from nonfederal funds, since there is no assurance that vehicle use was CDBG program related.

Issue Date: January 9, 2008
Audit Report No.: 2008-AT-1004
File Size: 403.25KB

Title: The City of West Palm Beach, FL Did Not Administer Its Community Development Block Grant Program

HUD OIG audited the Community Development Block Grant (CDBG) program administered by the City of West Palm Beach, Florida (City). The objective of the audit was to determine whether the City administered its CDBG program in accordance with applicable U.S. Department of Housing and Urban Development (HUD) requirements.

The City failed to properly administer its CDBG program in accordance with HUD requirements. Specifically, the City was deficient in (1) contract administration, (2) monitoring, (3) maintaining supporting documentation, and (4) reporting program income. The City failed to ensure that CDBG funds were used in compliance with program requirements and used to meet national objectives. As a result, we consider more than $2.7 million to be unsupported costs because the City failed to demonstrate that national objectives and other program requirements were met. In addition, the City did not adequately award four contracts in accordance with federal procurement requirements. It awarded contracts without full and open competition; did not prepare a cost analysis before awarding the contracts; and did not maintain documentation supporting that contractors were not debarred, suspended, or ineligible. As a result, the City could not ensure that more than $1.2 million in contracts it awarded provided full and open competition and that the costs were reasonable.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the City to (1) provide documentation supporting that HUD requirements were followed and national objectives were met for 27 CDBG activities or reimburse the CDBG program more than $2.7 million from nonfederal funds for not properly administering the program, and (2) develop, implement, and enforce more comprehensive written policies and procedures that comply with HUD requirements. In addition, the Director should require the City to (1) provide supporting documentation to justify the eligibility and reasonableness of $624,631 disbursed for the four contracts, or reimburse the CDBG program from nonfederal funds; and (2) ensure that federal procurement requirements are incorporated into the City policies and procedures, implemented, and enforced.

Issue Date: December 26, 2007
Audit Report No.: 2008-AT-1003
File Size:155KB

Title: The City of Jacksonville, FL Lacked Proper Support for Some Subrecipients Purchases and Expenditures

We reviewed the City of Jacksonville/County of Duval, Florida's (City) Community Development Block Grant program (CDBG). We conducted the review as part of the U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General's annual audit plan. Our objectives were to determine whether the City complied with CDBG regulations and requirements related to (a) use of competition when purchasing goods and services, (b) eligibility of public facilities/improvements costs, (c) financial management systems, (d) charging direct and indirect costs, (e) eligibility of housing rehabilitation participants, and (f) contracting with and monitoring of subrecipients.

The review did not identify reportable conditions for most of the cited objectives. However, the City needs to improve controls to ensure proper justification for sole source procurements and that subrecipients only use program funds for specific City-approved activities. We identified subrecipients that did not properly document or justify sole source procurements totaling $156,000 for four purchases. We also identified one instance in which the City reimbursed a subrecipient $34,552 for costs that were not for the activity component the City approved. These conditions occurred because the City did not adequately review the subrecipients' use of sole source procurements and because it did not adequately review a subrecipient's request for payment. As a result, the City could not adequately support the reasonableness of $156,000 in CDBG disbursements and the $34,552 paid for costs not associated with the City-approved activity.

We recommend that the Director of HUD's Office of Community Planning and Development require the City to establish and implement controls to ensure compliance with requirements for sole source purchases and that subrecipients are only reimbursed for costs incurred for activities approved in their funding request. The City should be required to reimburse the program for any portion of the $190,552 that it cannot support as being reasonable and having been incurred for the City-approved activity. Any reimbursements should be made from nonfederal funds.

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