HUD OIG Recovery Act - U.S. Department of Housing and Urban Development

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ARRA Audit Reports

Issue Date: April 26, 2013
Audit Report Number: 2013-SE-1003

Title: The City of Spokane Did Not Always Appropriately Procure, Match, or Report Funds in Accordance With Lead Hazard Control and Recovery Act Requirements

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the City of Spokane, WA’s Lead-Based Paint Hazard Control program funded by the American Recovery and Reinvestment Act to determine whether the City complied with procurement, matching, and reporting requirements when executing its grant. This audit was part of the mandate to monitor grant activities funded by the Recovery Act. We selected the City because it received the largest Lead Hazard Control grant in the HUD’s Region 10 (Alaska, Idaho, Oregon, and Washington) that had not already been audited by our office.

The City failed to ensure cost reasonableness for four Lead Hazard Control contracts. In addition, the City did not maintain adequate records of its matching contributions, nor did it accurately report the final total expenditure amount, the number of jobs created, and the amount of its vendor payments in FederalReporting.gov. We recommend that HUD require the City to (1) conduct cost analyses for the four contracts totaling more than $1.1 million and reimburse any unsupported amount, (2) support $426,130 in eligible matching funds or return almost $1.4 million in grant funds, (3) make the necessary changes to the reported final total expenditure and final vendor payments figures, and (4) obtain training on HUD’s procurement and matching requirements.

Issue Date: April 25, 2013
Audit Report Number: 2013-AT-1004

Title: The City of Sarasota, FL, Did Not Always Properly Administer Its NSP2

We audited the City of Sarasota because it was awarded $23 million in Neighborhood Stabilization Program 2 (NSP2) funds and it was in accordance with our audit plan to review funds provided under the American Recovery and Reinvestment Act of 2009. Our objective was to determine whether the City administered its NSP2 in accordance with applicable Federal requirements. Specifically, we wanted to determine whether (1) approved activities met a national objective, (2) program income was properly accounted for, and (3) expended funds were allowable.

We found the City met the low-, moderate-, or middle-income national objective and properly accounted for program income. However, it did not ensure that some NSP2 expenditures for the redevelopment of a public housing site were eligible. This condition occurred because the City did not (1) appropriately review expenditures, (2) have an adequate agreement with its subrecipient, (3) maintain effective coordination with all the parties involved in this activity, and (4) have continuous internal audit reviews conducted on its NSP2. This deficiency resulted in ineligible costs of $388,130 to the program.

In response to our audit, the City provided additional documentation after the exit conference to show ineligible expenditures were allowable or reclassified with other eligible expenditures. Therefore, the City was not required to reimburse the U.S. Treasury $388,130 from non-Federal funds.

We recommend that the Director of Community Planning and Development of the Jacksonville field office require the City to (1) implement its NSP2 policies and procedures; and (2) request its internal audit division to continually examine potentially risky areas of the City’s Office of Housing and Community Development program operations.

Issue Date: April 25, 2013
Audit Report Number: 2013-SE-1002

Title: Volunteers of America’s Whispering Pines Senior Village, Estacada, OR, Generally Used and Reported Its Green Retrofit Recovery Act Funds in Accordance With HUD and Recovery Act Rules and Regulations

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited Volunteers of America’s (VOA) Whispering Pines Senior Village’s Green Retrofit program funded by the American Recovery and Reinvestment Act. Our objective was to determine whether VOA used its Whispering Pines Green Retrofit Recovery Act funds in accordance with U.S. Department of Housing and Urban Development (HUD) and Recovery Act rules and regulations and accurately reported Recovery Act cost and jobs information. We selected the project, located in Estacada, OR, because it was the largest Green Retrofit project in our region, based on the amount awarded of $1.023 million, and because we had not previously audited this program. VOA’s Whispering Pines Senior Village, Estacada, OR, generally used and reported its Green Retrofit Recovery Act funds in accordance with HUD and Recovery Act rules and regulations. It did not always accurately report Recovery Act cost and jobs information. However, those inaccuracies did not cause a material error in reporting.

Issue Date: April 23, 2013
Audit Report Number: 2013-LA-1004

Title: The City of San Bernardino, CA, Did Not Administer Its Community Development Block Grant and Community Development Block Grant-Recovery Act Programs in Accordance With HUD Rules and Regulations

We reviewed the City of San Bernardino’s Community Development Block Grant (CDBG) and CDBG-Recovery Act (CDBG-R) programs because the U.S. Department of Housing and Urban Development’s (HUD) Los Angeles Office of Community Planning and Development expressed concerns about the City’s administration of its CDBG program. Our objective was to determine whether the City administered its CDBG and CDBG-R program funds in accordance with applicable HUD requirements.

We found that the City did not operate in accordance with HUD rules and regulations. It used $47,699 in CDBG funds for ineligible expenditures and lacked supporting documentation for more than $7.1 million. The City also did not report $168,761 in program income and did not adequately support its procurement activities for the $951,548 in Recovery Act funds it received.

We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require the City to (1) repay $47,699 in ineligible expenses from non-Federal sources, (2) support more than $7.1 million in expenses or repay the program, (3) remit $168,761 in unreported program income, and (4) demonstrate the reasonableness of $951,548 in Recovery Act funds used in the procurement of two contracts. We also recommend that HUD’s Associate Counsel for Program Enforcement pursue civil remedies, civil money penalties, or other administrative action, as appropriate, against the City for intentionally not reporting CDBG program income.

Issue Date: April 12, 2013
Audit Report No.: 2013-FW-1004

Title: The Housing Authority of the City of El Paso, TX Did Not Follow Recovery Act Obligation Requirements or Procurement Policies

We audited the Housing Authority of the City of El Paso because it met our oversight objectives for the American Recovery and Reinvestment Act of 2009, and because our risk assessment found the Authority had more than $1.7 million to be spent within 3 months of the expenditure deadline. Our audit objectives were to determine whether the Authority properly (1) obligated and spent its formula Recovery Act grant funds, (2) obtained its formula Recovery Act contracts, and (3) reported results in an accurate and timely manner.

The Authority improperly obligated Recovery Act funds totaling about $2.68 million after the statutory obligation deadline. It properly spent the remainder of the funds, which totaled about $10 million, by the statutory expenditure deadline. Also, it improperly documented its bid evaluations of and may have improperly obtained 11 roofing contracts totaling about $5.87 million. The Authority’s improper actions occurred due to how and when it planned and performed its Recovery Act obligations. The Authority properly reported its Recovery Act results accurately and in a timely manner.

We recommend the Director of the Fort Worth Office of Public Housing require the Authority to repay about $2.68 million in 2009 Recovery Act funds to the U. S. Treasury or provide eligible costs that it obligated and expensed before the deadlines. In addition, HUD should require the Authority to provide support for or repay $5.87 million for the 11 contracts that it could not show were properly procured.

Issue Date: March 12, 2013
Audit Report No: 2013-FW-1001

Title: Cherokee Nation, Tahlequah, OK, Native American Housing Block Grant, American Recovery and Reinvestment Act

We audited the Cherokee Nation in accordance with the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s goal to review funds provided under the American Recovery and Reinvestment Act of 2009. Our objective was to determine whether the Nation complied with Recovery Act requirements for procuring, expending, and reporting its formula Native American Housing Block Grant funds received under the Recovery Act.

The Nation generally administered its $11.8 million grant according to Recovery Act requirements. However, it did not obligate $215,000 of the grant award by the obligation date because Nation officials did not completely understand the obligation requirements. As a result, it incorrectly certified that it had obligated its funds. Additionally, the Nation did not keep adequate trip log reports to support that it used 8 of 17 vehicles as required. This condition occurred because staff and management did not comply with the Nation’s policies and procedures. As a result, management could not support that $16,902 spent on one vehicle was an eligible cost.

We recommended that HUD require the Nation to (1) implement policies and procedures that are consistent with HUD requirements when obligating funds to subrecipients, (2) support that a vehicle was used as required or repay $16,902 to the U.S. Department of the Treasury from non-Federal tribal funds and (3) ensure that its staff and management fully comply with its procedures for completing trip log reports.

Issue Date: March 4, 2013
Audit Report No: 2013-NY-1005

Title: West New York Housing Authority Officials Generally Administered Their Recovery Act Capital Fund Program in Accordance With Recovery Act and HUD Requirements

We audited the West New York Housing Authority’s American Recovery and Reinvestment Act Capital Fund program in support of the Office of Inspector General’s audit plan goal to oversee Recovery Act-funded activities. We selected the Authority based upon a risk analysis of authorities receiving Recovery Act capital funds administered through the U.S. Department of Housing and Urban Development’s (HUD) Newark, NJ, field office, which considered authorities’ funding and HUD’s risk analysis. The Authority received a moderate risk score of 57, ranking it 27th out of 107 authorities monitored by the field office. The audit objectives were to determine whether Authority officials obligated and expended their capital funds in accordance with the Recovery Act and HUD regulations and complied with Recovery Act reporting requirements.

Authority officials generally administered their Recovery Act capital fund program in accordance with the Recovery Act and HUD’s requirements. Specifically, funds were obligated and expended in a timely manner for eligible activities and supported with adequate documentation, and the Authority’s activities were reported in compliance with Recovery Act requirements. However, while costs were incurred for eligible activities, Authority officials misclassified $68,260 to the fees and costs budget line item as opposed to that of dwelling structures. This occurred because officials over-expended dwelling structures and did not request a budget revision from HUD.

We recommend that the Director of the HUD Newark Office of Public Housing instruct Authority officials to ensure their revised Actual Modernization Cost Certificate reflects the reclassification of $68,260 in accordance with its revised budget.

Issue Date: December 6, 2012 (Reissued February 5, 2013)
Audit Memorandum Number: 2013-NY-1001 Feb 05-2013

Title: The City of Albany, NY, Did Not Always Administer Its CDBG Recovery Act Program Effectively and Efficiently

We audited the City of Albany, NY’s administration of its supplemental Community Development Block Grant program funded under the American Recovery and Reinvestment Act of 2009 (CDBG-R). The objectives were to determine whether the City administered its CDBG-R program effectively, efficiently, and economically in accordance with applicable rules and regulations, including the Recovery Act, and other U.S. Department of Housing and Urban Development (HUD) requirements.

City officials did not always administer the CDBG-R program effectively, efficiently, and economically in accordance with applicable rules and regulations, including the Recovery Act, and other HUD requirements. Specifically, contrary to program regulations, City officials did not ensure that contract and procurement regulations were followed; activities met a national objective of the program; job creation was adequately tracked and documented; “buy American” provisions of the Recovery Act were adequately monitored; and costs were necessary, reasonable, and adequately supported. In addition, officials made a double payment for electrical work related to a rehabilitation activity and made a payment for a former City employee’s unused vacation time, which was accrued before the award of the CDBG-R grant.

We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct City officials to (1) repay from non-Federal funds the ineligible costs of $5,291 and (2) submit documentation to justify the unsupported costs of $740,682 so that HUD can make an eligibility determination. HUD should require the City to repay any costs determined to be ineligible from non-Federal funds and establish controls to ensure compliance with program requirements.

Issue Date: December 6, 2012 (Reissued February 5, 2013)
Audit Memorandum Number:2013-NY-1001 Feb 05-2013

Title: The City of Albany, NY, Did Not Always Administer Its CDBG Recovery Act Program Effectively and Efficiently

Issue Date: January 23, 2013
Audit Report No: 2013-LA-1002

Title: The Southern Nevada Regional Housing Authority, Las Vegas, NV, Did Not Always Administer Its Recovery Act Capital Fund Grants in Accordance With Recovery Act and HUD Requirements

We audited the Southern Nevada Regional Housing Authority’s American Recovery and Reinvestment Act Public Housing Capital Fund grants as part of our objective to review funds provided under the American Recovery and Reinvestment Act of 2009. We selected the Authority because it is a newly formed entity, created January 1, 2010, and the Authority and the entities that formed it received more than $21 million in Recovery Act Capital Fund grants. The objective of our review was to determine whether the Authority administered its Recovery Act funds in accordance with Recovery Act and U.S. Department of Housing and Urban Development (HUD) regulations.

The Authority generally complied with HUD procurement policies for its Recovery Act Capital Fund grants. However, it did not always ensure that its contractors complied with the Davis-Bacon Act and Federal labor standards. The Authority did not (1) ensure that proper wage rates were paid, (2) ensure that additional wage classifications and rates were requested and received from the U.S. Department of Labor, or (3) investigate complaints received by contractor employees. Further, the Authority did not always ensure that it complied with Recovery Act reporting requirements. Specifically, it did not accurately report in FederalReporting.gov the number of jobs created and retained. This condition occurred because the Authority did not effectively monitor its contractors in the enforcement of Federal labor standards and lacked written policies and procedures for Recovery Act reporting. As a result, the Authority’s contractors did not always comply with the Davis-Bacon Act and underpaid employees more than $7,300. Also, the Authority’s use of Recovery Act funds was not always transparent, and the public did not always have access to accurate information about the Authority’s use of the Recovery Act grants.

We recommend that the Director of HUD’s San Francisco Office of Public Housing require the Authority to obtain documentation to support that contractors and subcontractors made corrective payments for improper wages cited, update its policies and procedures related to Davis-Bacon compliance, and establish policies and procedures to ensure accurate and complete reporting to HUD and other Federal agencies.

Issue Date: January 4, 2013
Audit Report No 2013-NY-1002

Title: The Hoboken Housing Authority, Hoboken, NJ, Generally Administered the Recovery Act Capital Fund Program in Accordance With Regulations

We audited the Hoboken, NJ, Housing Authority’s administration of its Recovery Act Capital Fund program in support of HUD OIG’s audit plan goals to oversee Recovery Act-funded activity and improve HUD’s execution of and accountability for its fiscal responsibilities. We selected the Authority based on a risk assessment, which considered the Authority’s funding, the U.S. Department of Housing and Urban Development’s (HUD) risk analysis, and prior OIG audits. The audit objectives were to determine whether Authority officials obligated and expended the capital funds in accordance with the Recovery Act and HUD regulations and complied with Recovery Act reporting requirements.

Authority officials generally administered the Recovery Act Capital Fund program in accordance with regulations. Specifically, they established and implemented adequate controls to ensure that their funds awarded under the Recovery Act were obligated and expended as required. However, there was inadequate support that $8,903 was obligated in a timely manner and $9,000 was expended for an eligible cost, and $83,642 of costs were misclassified.

We recommend that HUD instruct Authority officials to provide supporting documentation for the obligation of $8,903 in Recovery Act capital funds, or take appropriate action to recapture the funds in accordance with the Recovery Act, and ensure that their revised Actual Modernization Cost Certificate and HUD’s Line of Credit Control System reconcile with the corrective action taken for the misclassification of $83,642 in costs.

Issue Date: November 9, 2012
Audit Report Number: 2013-PH-1002

Title: City of Baltimore, MD, Did Not Administer Its Homelessness Prevention and Rapid Re-Housing Program Grant According to Recovery Act Requirements

We audited the City of Baltimore, MD's Homelessness Prevention and Rapid Re-Housing Program grant because (1) its $9.5 million grant was the largest grant in the State of Maryland, (2) it had disbursed $6.6 million of its grant funds as of December 2011, and (3) we have a mandate to audit American Recovery and Reinvestment Act of 2009 activities. The audit objective was to determine whether the City properly obligated and expended grant funds and monitored activities for compliance with Recovery Act requirements.

The City did not properly obligate and expend grant funds, and it generally did not monitor activities for compliance with Recovery Act requirements. Specifically, the City authorized reimbursements for program expenses based on prorated amounts rather than actual expenses, could not support all expenditures, used grant funds for potentially ineligible activities, and generally did not monitor the activity of its fiduciary agent and subgrantees. In addition, HUD’s monitoring review disclosed many problems with the City’s administration of the grant.

We recommend that HUD require the City to provide all of the documentation it collected supporting its actions to satisfy the key corrective measures prescribed in HUD’s March 16, 2012, monitoring letter and we also recommend that HUD review the documentation provided by the City to demonstrate that it used $9.5 million in grant funds only for eligible services for eligible participants and require the City to reimburse HUD from non-Federal funds for any amount that it cannot support.

Issue Date: October 18, 2012
Memorandum Number: 2013-IE-0801

Title: American Recovery and Reinvestment Act Lessons Learned Initiative

In response to a request from the Recovery Accountability and Transparency Board, we gathered and documented information from the U.S. Department of Housing and Urban Development (HUD) regarding its lessons learned from the implementation of the American Recovery and Reinvestment Act of 2009. This initiative was led by the U.S. Department of Interior, Office of Inspector General (OIG). The objective of the initiative was to identify which actions, processes, and mechanisms have been beneficial or posed challenges to agencies and their respective OIGs in meeting the requirements of the Recovery Act.

We identified new monitoring tools and initiatives that HUD developed to monitor Recovery Act-funded programs as well as obstacles and challenges that HUD encountered. The initiative was informational in nature and contains no recommendations.

Issue Date: October 18, 2012
Audit Number: 2013-NY-0001

Title: HUD Effectively Administered the Homelessness Prevention and Rapid Re-Housing Program, but Measuring the Program’s Outcome Presented Challenges

We reviewed HUD’s monitoring of the Homelessness Prevention and Rapid Re-Housing Program (HPRP) in support of HUD OIG’s audit plan goals to oversee Recovery Act-funded activity and improve HUD’s execution of and accountability for fiscal responsibilities. The objective of the audit was to determine whether HUD had established adequate controls to (1) ensure that grantees complied with Recovery Act expenditure and performance reporting requirements and (2) evaluate the HPRP’s effectiveness so that positive policies can be applied to future HUD-funded homelessness prevention and assistance programs.

HUD took actions to mitigate program risks and generally ensure that HPRP grantees complied with Recovery Act requirements and HPRP regulations. However, HUD’s ability to measure the effectiveness of the HPRP was hampered by data limitations. These limitations are attributed to the limited timeframe for the HPRP and variations in reporting by HPRP grantees. As a result, HUD does not have reliable data for outcome-based measurements of the HPRP. Recognizing these limitations, HUD contracted for a multi-phased study of the HPRP and in the interim, incorporated perceived HPRP successful attributes into the Emergency Solutions Grants program. Nevertheless, additional actions could be taken to develop information to assist in evaluating the effectiveness of the HPRP.

We recommend that HUD’s Acting Deputy Assistant Director for Special Needs encourage HPRP grantees to identify successful performance evaluation attempts and profiles of HPRP promising practices for analysis and consideration for future study and report on their use of data available in HMIS to identify Emergency Solutions Grant assisted participants who were HPRP participants to assist in the evaluation of the effectiveness of the HPRP assistance.

Issue Date: September 27, 2012
Audit Report Number: 2012-CH-1013

Title: The Flint Housing Commission, Flint, MI, Did Not Always Administer Its Grants in Accordance With Recovery Act, HUD’s, and Its Own Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Flint Housing Commission’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund competitive grants. We selected the Commission based upon our analysis of risk factors relating to the housing agencies in Region 5’s jurisdiction. Our objective was to determine whether the Commission administered its grants in accordance with Recovery Act, HUD’s, and its own requirements. This is the first of two planned audit reports on the Commission’s Recovery Act grants.

The Commission generally complied with the requirements of the Davis-Bacon Act for all four of its Recovery Act competitive grants. However, it failed to follow HUD’s and its own procurement requirements for its Recovery Act competitive grants. Specifically, it did not (1) provide an adequate rationale for using a noncompetitive procurement method for its Recovery Act contracts, (2) prepare an independent cost estimate or analysis before the solicitation of offers, and (3) obtain approval from HUD and its board before revising its plan for use of the funds. Additionally, the Commission did not (1) issue payments to its contractor in accordance with HUD’s requirements and (2) ensure that its contractor included Section 3 clauses in contracts for work funded by the Recovery Act grants. As a result, the Commission hindered full and open competition, and HUD and the Commission lacked assurance that more than $3.1 million in Recovery Act competitive grant funds was used appropriately.

We recommend that the Director of HUD’s Detroit Office of Public Housing require the Commission to (1) reimburse HUD more than $3 million in grant funds for the inadequate procedures used in the procurement process and (2) implement adequate procedures and controls to ensure that contracts are awarded and managed in accordance with HUD’s requirements and its own procurement policy.

Issue Date: September 27, 2012
Audit Report Number: 2012-CH-1011

Title: The Stark Metropolitan Housing Authority, Canton, OH, Did Not Always Administer Its Grant in Accordance With Recovery Act, HUD’s, and Its Own Requirements

The U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General (OIG) audited the Stark Metropolitan Housing Authority’s American Recovery and Reinvestment Act Public Housing Capital Fund stimulus formula grant as part of the activities in our fiscal year 2012 annual audit plan. We selected the Authority based upon risk factors related to the housing agencies in Region 5’s jurisdiction. Our objective was to determine whether the Authority administered its grant in accordance with Recovery Act, the U.S. Department of Housing and Urban Development’s (HUD), and its own requirements.

The Authority did not always ensure that its contractors complied with the Davis-Bacon Act and Federal labor standards. For one contractor, the Authority did not (1) conduct a sufficient number of interviews with seven subcontractors’ employees to ensure that proper wages were received, (2) investigate complaints of alleged violations of Federal labor standards for two subcontractors, or (3) obtain sufficient documentation from seven subcontractors to determine whether their employees were paid the appropriate prevailing wage rates in accordance with the Davis-Bacon Act. The Authority did not always comply with Recovery Act, HUD’s, or its own procurement procedures. Specifically, it (1) purchased one range and one refrigerator to replace appliances that had remaining useful life, (2) did not perform a cost analysis before soliciting bids for the purchase and installation of video surveillance equipment, and (3) did not ensure that proper procurement procedures were followed for the purchase and installation of 119 furnaces.

Further, the Authority did not always ensure that it complied with HUD’s and Recovery Act reporting requirements. Specifically, it did not accurately report in FederalReporting.gov the number of jobs created and retained. As a result, HUD and the Authority lacked assurance that Recovery Act funds were used appropriately, the public did not have access to accurate information regarding the number of jobs created and retained, and the Authority’s use of the formula grant was not transparent.

We recommend that HUD require the Authority to (1) support that employees were paid proper Davis-Bacon wages or reimburse underpaid employees $6,820 from non-Federal funds, (2) reimburse HUD $680 from non-Federal funds for transmission to the U.S. Treasury for the appliances that were improperly replaced, and (3) implement adequate procedures and controls to address the findings cited in this audit report.

Issue Date: September 27, 2012
Audit Report No. 2012-FO-0006

Title: HUD’s Oversight of Recovery Act-Funded Housing Programs

We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of the four selected housing programs funded by the American Recovery and Reinvestment Act of 2009. These HUD programs received $4.86 billion of the $13.61 billion in Recovery Act funding that HUD received. Our audit objectives were to determine whether HUD (1) monitored the recipients to ensure that Recovery Act funds would be fully expended by the expenditure due dates and (2) ensured that expired unliquidated funds would be recaptured and returned to the U.S. Department of the Treasury in accordance with the Pay-It-Back Act. The Office of Inspector General (OIG) initiated the audit as part of its fiscal year 2012 audit plan, which is in line with OIG’s priority to review Recovery Act funding.

HUD adequately monitored Recovery Act recipients to ensure that (1) Recovery Act funds would be fully expended by the expenditure due dates and (2) unliquidated but expired Recovery Act funds would be identified and recaptured as appropriate. However, HUD was not effective in ensuring that $9.52 million in expired and unused Recovery Act funds would be returned promptly to the Treasury in accordance with the intent of the Pay-It-Back Act.

We recommend that the Office of the Chief Financial Officer, in coordination with the program offices, establish policies and procedures governing the return of recaptured Recovery Act funds and immediately transfer $9.52 million in expired and unused Recovery Act funds to the Treasury’s general fund.

Issue Date: September 27, 2012
Audit Report Number: 2012-KC-1006

Title:The City of St. Louis, MO, Did Not Effectively Manage Its Recovery Act Funding

The U.S. Department of Housing and Urban Development’s (HUD), Office of Inspector General reviewed the American Recovery and Reinvestment Act of 2009 Community Development Block Grant (CDBG-R) Program of the City of St. Louis, MO. Our audit objectives were to determine whether the City complied with applicable Recovery Act requirements for CDBG-R funds and properly reported its Recovery Act activities. We found that the City did not comply with applicable Recovery Act requirements for CDBG-R funds and did not properly report its Recovery Act activities. Specifically, it (1) approved contracts that did not comply with Federal procurement requirements, (2) did not adequately enforce Davis-Bacon Act or Section 3 requirements, and (3) reported incomplete and inaccurate information. As a result, the City used CDBG-R funds for unsupported expenses, failed to ensure that all contractors paid the appropriate wages and disadvantaged workers received economic opportunities, and did not have transparency in its reported use of Recovery Act funds. We recommend that HUD require the City to (1) support that more than $1.3 million in Recovery Act contracts awarded was granted at a reasonable cost and repay any amount determined to be unreasonable or ineligible, (2) review all payments to its contractors’ employees to determine whether wage restitution is owed, and (3) make any needed corrections in FederalReporting.gov. In addition, we recommend that HUD assist the City in receiving formal training on the issues identified in this report.

Issue Date: September 21, 2012
Audit Report Number: 2012-LA-1012

The City of Long Beach, CA, Did Not Fully Comply With Federal Regulations When Administering Its NSP2 Grant

We conducted an audit of the City of Long Beach because it was awarded more than $22.2 million in Recovery and Reinvestment Act of 2009 Neighborhood Stabilization Program 2 (NSP2) funds on February 11, 2010 as the lead agency in a consortium with Habitat for Humanity of Greater Los Angeles (Habitat), making it one of the largest NSP2 fund recipients in the Los Angeles area. Our objective was to determine whether the City of Long Beach administered its NSP2 grant in accordance with Federal regulations.

We found no problems with the $5.5 million the City provided to Habitat, used to purchase and redevelop abandoned or foreclosed-upon homes. However, the City did not fully comply with Federal regulations when administering its NSP2 second mortgage assistance activities. Specifically, it did not (1) obtain the 1-percent market rate purchase discount on non-real-estate-owned properties and (2) have all properties appraised within 60 days of the final offer. Therefore, we recommend that the Director of the Los Angeles Office of Community Planning and Development require the City to reimburse the NSP2 program $84,110 from non-Federal funds, and implement procedures and controls to ensure that its appraisals meet program timeframe requirements.

Issue Date: September 21, 2012
Audit Report Number: 2012-LA-0004

Title: HUD Did Not Ensure Public Housing Agencies’ Use of Property Insurance Recoveries Met Program Requirements

The U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General (OIG) audited HUD’s Public Housing Capital Fund program and American Recovery and Reinvestment Act (Recovery Act) Capital Fund program monitoring procedures because it was included in our annual audit plan and was prompted by a prior external audit (OIG audit report 2011-LA-1802, issued May 5, 2011). Our objective was to determine whether HUD’s Capital Fund program monitoring procedures and reporting system details were adequate to ensure that public housing agencies disclosed and used property insurance recoveries in accordance with program requirements.

HUD did not adequately monitor insurance recoveries to ensure that public housing agencies appropriately applied the applicable credits either as a cost reduction or cash refund as appropriate. HUD’s program guidance was outdated and the procedures for the annual in-office review of the agencies’ ongoing capital activities and for monitoring Recovery Act program grants were not sufficiently detailed to address the review of insurance recoveries. In addition, the information HUD required agencies to submit in their annual plans and in HUD’s Financial Assessment Sub-System lacked sufficient details to be effectively used in the monitoring of insurance recoveries.

We recommend HUD update its information collection requirements to ensure that public housing agencies disclose insurance recoveries, revise its policies and procedures to ensure oversight of the disclosure of insurance recoveries, and issue a notice with guidance for public housing agencies related to the procedures for the disclosure and use of insurance recoveries.

Issue Date: September 12, 2012
Audit Report Number: 2012-NY-1012

Title: The Buffalo Municipal Housing Authority Did Not Always Administer Its Recovery Act Capital Fund Program in Accordance With HUD Requirements

We audited the Buffalo Municipal Housing Authority’s Public Housing Capital Fund Stimulus (Formula) program funded under the Recovery and Reinvestment Act of 2009 based on an Office of Inspector General risk analysis and the amount of funding the Authority received. The objectives of the audit were to determine whether Authority officials (1) procured contracts in accordance with U.S. Department of Housing and Urban Development (HUD) regulations, and (2) obligated and expended capital funds in accordance with the Recovery Act and submitted mandated reports in a timely manner and with accurate information.

Authority officials did not always comply with the procurement requirements of the Recovery Act program and, therefore, did not properly obligate Recovery Act funds. Specifically, Authority officials did not ensure that the procurement of Recovery Act contracts was conducted in a manner that provided full and open competition. In addition, payments were made on other obligations that were executed after the Recovery Act obligation deadline. Authority officials charged questionable expenditures to the Recovery Act Capital Fund grant. Specifically, they (1) expended Recovery Act funds on nondwelling equipment purchases that benefited their central office cost center, (2) requisitioned funding from HUD’s Line of Credit Control System in excess of the amounts needed, (3) failed to expend funds in accordance with their Recovery Act Capital Fund annual statement, and (4) did not accurately report Recovery Act expenditure and job creation or retention information.

We recommend that the Director of HUD’s Buffalo Office of Public Housing instruct Authority officials to (1) provide documentation and/or justifications for more than $9.7 million expended on costs that did not meet the procurement and obligation requirements of the Recovery Act, and reimburse the U.S. Treasury the amounts determined to be ineligible from non-Federal or other eligible funds, (2) reimburse the U.S. Treasury from non-Federal funds $110,814 expended on ineligible costs pertaining to nondwelling equipment purchases for their central office cost center, and (3) provide documentation to justify the $30,311 in unsupported costs requisitioned in excess of the Authority’s needs.

Issue Date: September 5, 2012
Audit Report Number: 2012-CH-1010

Title: The Aurora Housing Authority, Aurora, IL, Did Not Administer Its Grant in Accordance With Recovery Act, HUD, and Its Own Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Aurora Housing Authority’s Recovery Act formula grant. The audit was part of the activities in our fiscal year 2012 annual audit plan. We selected the Authority based upon our analysis of risk factors related to the housing agencies in Region V’s (see footnote) jurisdiction. Our objective was to determine whether the Authority administered its grant in accordance with Recovery Act, HUD’s, and its own requirements.

The Authority did not administer its grant in accordance with Recovery Act, HUD’s, and its own requirements. While the Authority generally obligated and expended its Recovery Act funds in accordance with Recovery Act rules and regulations, it did not ensure that its contractors (1) purchased products manufactured in the United States in accordance with the Buy American Act or that met Energy Star standards and (2) paid prevailing wages in accordance with the Davis-Bacon Act. Further, the Authority did not (1) follow Federal and its own procurement requirements, (2) document that work was complete before payments were made, and (3) correctly report the progress of its Recovery Act grant activities.

As a result of the Authority’s noncompliance, HUD and the Authority lacked assurance that more than $346,000 in Recovery Act grant funds was used appropriately. Additionally, the public did not have access to accurate information regarding the number of jobs created and retained with formula grant funds, and the Authority’s use of formula grant funds was not transparent.

We recommend that the Director of HUD’s Chicago Office of Public Housing require the Authority to (1) reimburse HUD $2,400 from non-Federal funds for transmission to the U.S. Treasury, (2) support or reimburse HUD more than $343,000 from non-Federal funds for transmission to the U.S. Treasury, (3) pursue collection from the contractor or reimburse the contractor’s employees more than $900 from non-Federal funds, (4) ensure that its staff is trained on and familiar with Federal procurement requirements, and (5) implement adequate procedures and controls to address the findings cited in this audit report

(Footnote) Region V includes the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.

Issue Date: September 7, 2012
Audit Report No.: 2012-FW-1014

Title: State of Louisiana Department of Children and Family Services, Baton Rouge, LA, Recovery Act Homelessness Prevention and Rapid Re-Housing Program

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009, we reviewed the State of Louisiana’s Department of Children and Family Services’ Homelessness Prevention and Rapid Re-Housing Program. Our objectives were to determine whether the State ensured that (1) Recovery Act disbursements to local governments were eligible and supported and (2) Program participants were eligible to receive assistance in accordance with Program requirements.

The State generally ensured that its Recovery Act disbursements to local governments were eligible. However, some of the disbursements were not adequately supported. This condition occurred because the State’s review did not always identify issues related to missing documentation when it processed reimbursement requests from its local governments. As a result, the State incurred $10,547 in unsupported costs. Additionally, the State did not always ensure that Program participants’ eligibility to receive Program assistance was adequately supported. Specifically, 20 of 37 Program participant files reviewed lacked required documentation supporting income verification; housing status; and needs, rent reasonableness, and lead-based paint determinations. This condition occurred because the State did not did not ensure that its local governments and subgrantees established adequate control procedures to ensure that they adequately supported their eligibility determinations. As a result, the State paid $31,217 in Program assistance for participants whose eligibility was not adequately documented.

We recommend that the U. S. Department of Housing and Urban Development’s (HUD) Director of Community Planning and Development require the State to (1) support or repay $41,764 in unsupported costs. Since the State’s Recovery Act program ends July 31, 2012, we did not provide a recommendation to address the causes regarding expenditure and eligibility violations.

Issue Date: September 6, 2012
Audit Report No. 2012-AT-1015

Title: Little Haiti in Miami, FL, Did Not Fully Comply With Federal Rules When Administering NSP2

We audited Little Haiti Housing Association as a result of a complaint received regarding its administration of the multifamily activity funded under the Neighborhood Stabilization Program 2 (NSP2). Our objective was to determine whether Little Haiti used NSP2 funds in compliance with Federal regulations. Specifically, we focused on determining whether (1) Little Haiti complied with Federal regulations when selecting and using the developer, contractor, and management company in the purchase, rehabilitation, and management of the multifamily property; (2) NSP2 funds were used for eligible program costs and were sufficiently supported; and (3) obvious deficiencies occurred in the rehabilitation work performed on the multifamily property.

We found no evidence that the allegations in the complaint were valid. However, Little Haiti did not fully comply with Federal requirements when administering its multifamily activity under NSP2. It reimbursed itself for tenant certification services, although the co-developer fee that Little Haiti received covered this service. In addition, it did not ensure that energy efficiency and water conservation standards were met and failed to comply with the affordable rent definition stated in the consortium’s NSP2 application to HUD. Little Haiti believed that the fee earned was not required to be spent on the multifamily development costs, that it complied with green improvement standards, and was unaware of the rent policy established in the grantee’s NSP2 application. In addition, Neighborhood Housing Services did not monitor Little Haiti to ensure compliance with the latter two NSP2 requirements. As a result, $20,183 in NSP2 funds was inappropriately reimbursed to Little Haiti, tenants may have paid higher utility costs, and 31 tenants paid excess rent amounts totaling $34,869.

We recommend that the Director of Community Planning and Development of the Miami field office require the grantee to repay $20,183 to its NSP2, provide documentation to support that products purchased for the multifamily development complied with energy efficiency and water conservation standards, and repay $34,869 in excess rent to tenants.

Issue Date: August 9, 2012
Audit Report Number: 2012-SE-1005

Title: The State of Washington Generally Complied With Lead Hazard Control Grant and Recovery Act Requirements but Charged Excessive Administrative Costs

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Washington State Department of Commerce to determine whether it complied with Lead Hazard Control grant project eligibility, matching contribution, administrative cost, and American Recovery and Reinvestment Act reporting requirements. This audit is part of the national mandate to monitor grant activities funded by the Recovery Act. We selected Washington State because it received the largest Lead Hazard Control grant in the State.

The State generally complied with Lead Hazard Control grant and Recovery Act requirements. It selected eligible projects, provided adequate matching contributions, and accurately reported Recovery Act grant information. However, the State charged excessive administration costs to the Recovery Act Lead Hazard Control grant. This condition occurred because the State misunderstood the grant’s administrative cost limitation requirement. As a result, $202,824 was unavailable for lead-based paint control.

We recommend that HUD require the State to reimburse the U.S. Treasury the $202,824 spent on excessive administrative costs and provide training on the Lead Hazard Control grant program to the State.

Issue Date: August 3, 2012
Audit Report No.: 2012-CH-1009

Title: The Hammond Housing Authority, Hammond, IN, Did Not Administer Its Recovery Act Grants in Accordance With Recovery Act, HUD’s, and Its Own Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Hammond Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus formula and competitive grants. The audit was part of the activities in our fiscal year 2012 annual audit plan. We selected the Authority based upon our analysis of risk factors related to the housing agencies in Region V’s jurisdiction. Our objective was to determine whether the Authority administered its grants in accordance with Recovery Act, HUD’s, and its own requirements.

The Authority did not administer its grants in accordance with Recovery Act, HUD’s, and its own requirements. While the Authority generally obligated and expended its Recovery Act funds in accordance with Recovery Act rules and regulations, it did not ensure small purchases or contracts above its small purchase threshold were properly procured and executed in accordance with HUD’s requirements and its own procurement policies. Further, it did not ensure Federal and its own procurement requirements were followed when change orders were approved for work items that were outside the scope of work for the construction contracts.

The Authority also did not ensure that Recovery Act grant funds were (1) disbursed within HUD’s required timeframe, (2) properly allocated and drawn from appropriate budget line items, and (3) spent on eligible items.

The Authority did not ensure that its contractors complied with buy-American requirements of the Recovery Act, the Davis-Bacon Act, and HUD’s Section 3 Act of 1968. It also did not accurately report its Recovery Act information for all three Recovery Act grants in FederalReporting.gov.

These deficiencies resulted in $1,625 in ineligible costs, $281,049 in unsupported costs, and $7,000 in funds to be put to better use. Additionally, the public did not have access to accurate information relating to the Authority’s expenditures of the Recovery Act funds.

We recommend that the program coordinator of the Office of Public Housing require the Authority to (1) provide documentation or reimburse HUD $174,471 from non-Federal funds for transmission to the U.S. Treasury for inappropriate change orders, (2) support or reimburse HUD more than $106,000 from non-Federal funds for transmission to the U.S. Treasury, (3) pursue collection of $7,000 from its mixed finance development partner from non-Federal funds, and (4) implement adequate procedures and controls to address the findings cited in this audit report.

Issue Date: June 29, 2012
Audit Report No. 2012-FW-1010

Title: The Housing Authority of the City of Mineral Wells, TX, Had Errors in the Administration of Its Recovery Act Public Housing Capital Fund Grant

To meet the Office of Inspector General’s (OIG) objective to review funds provided under the American Recovery and Reinvestment Act of 2009 and at HUD's suggestion, we reviewed the Housing Authority of the City of Mineral Wells Public Housing Capital Fund Stimulus (formula) Recovery Act funded activities. Specifically, our objectives were to determine whether the Authority followed the Recovery Act rules and regulations when obligating and expending its Recovery Act capital funds and reported Recovery Act funds, as required.

Although the Authority used its Recovery Act grant funds for eligible activities, it had errors in its obligations, procurements, expenditures, and reporting. The errors occurred because the Authority was not familiar with some Recovery Act requirements. As a result, it spent $6,400 that it did not obligate or expense in a timely manner and an additional $7,745 that it did not properly expense. In addition, the Authority’s late and inaccurate reporting defeated the transparency goals of the Recovery Act.

We recommend that the Director of HUD's Office of Public Housing require the Authority to repay $6,400 that it did not obligate in a timely manner and repay $7,745 that it improperly expensed or provide other eligible costs. HUD should return the ineligible amounts to the U.S. Treasury. HUD should also ensure that the Authority has the appropriate training and HUD assistance regarding procurement for capital projects.

Issue Date: June 21, 2012
Audit Report No. 2012-PH-1009

Title: The City of Philadelphia, PA, Generally Administered Its Neighborhood Stabilization Program 2 Grant in Accordance With Applicable Requirements

We audited the City of Philadelphia, PA’s administration of its Neighborhood Stabilization Program 2 grant that it received under the American Recovery and Reinvestment Act of 2009 as part of our fiscal year 2012 audit plan. Our objective was to determine whether the grantee administered the grant in accordance with Recovery Act and U.S. Department of Housing and Urban Development (HUD) requirements. We found that the grantee generally administered its grant in accordance with Recovery Act and HUD requirements. However, the grantee and its grant subrecipient, the Philadelphia Redevelopment Authority, did not have a HUD-approved cost allocation plan as required by Federal regulations. We recommended that HUD require the grantee and its subrecipient to develop a cost allocation plan which provides an equitable method for distributing administrative costs to the benefiting programs and obtain HUD approval for the plan.

Issue Date: June 25, 2012
Audit Report No. 2012-SE-1004

Title: The City of Seattle, WA, Used Its Recovery Act CDBG-R Funds in Accordance With HUD and Recovery Act Requirements

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the City of Seattle’s Community Development Block Grant - Recovery (CDBG-R) program to determine whether the City used its CDBG-R funds in accordance with HUD and Recovery Act requirements and subgrantee expenditures were appropriate, eligible, and supported. We selected the City for review because it received $3.26 million in CDBG-R funds, more than any other municipality in Region 10 (Alaska, Idaho, Oregon, and Washington). The City used its CDBG-R funds in accordance with HUD and Recovery Act requirements and subgrantee expenditures were appropriate, eligible, and supported. The audit report contains no recommendations, and no further action is necessary with respect to the report.

Issue Date: June 15, 2012
Audit Report No. 2012-LA-1008

Title: The City of Phoenix, AZ, Did Not Always Comply With Program Requirements When Administering Its NSP1 and NSP2 Grants

We completed a review of the City of Phoenix’s (City) Neighborhood Stabilization Program (NSP) grants NSP1 and NSP2. We performed the review because it supports the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s strategic plan to contribute to the oversight objectives of the American Recovery and Reinvestment Act of 2009 and the City received a $60 million grant as one of 56 NSP2 grantees. Our objective was to determine whether the City administered its NSP2 grant in accordance with HUD requirements. Additionally, we reviewed the Park Lee Apartments rehabilitation activity for compliance with NSP1 and NSP2 requirements.

The City did not administer its NSP1 and NSP2 grants in accordance with HUD rules and regulations. Specifically, the City’s rehabilitation contract administration was not adequate and did not comply with the NSP2 grant agreement, resulting in an insufficient contract scope of work, inadequate oversight and verification of contract work and expenditures, insufficient maintenance of procurement documentation, inappropriate contract modifications, installation of substandard air conditioning units, and noncompliance with the grant’s Buy American requirements. Additionally, the City inappropriately charged the NSP1 and NSP2 grants for actual losses that could have been covered by insurance, unsupported Park Lee Apartments additional payments, and salaries and wages that did not comply with Federal cost principles.

We recommend that the Director of HUD’s San Francisco Office of Community Planning and Development require the City to (1) stop incurring costs for NSP-funded multifamily rehabilitation projects until HUD determines whether the City has the capacity to carry out these activities in compliance with HUD rules and regulations; (2) support or repay from non-Federal funds expenditures totaling $6.16 million identified in this report; (3) reimburse HUD $140,121 from non-Federal funds for ineligible actual loss charges related to the theft and vandalism of air conditioners; (4) reimburse the City’s NSP2 grant from non-Federal funds $299,901 for substandard equipment, $31,270 for equipment that did not meet the grant’s Buy American provisions, and $60,051 for ineligible actual loss charges related to the theft and vandalism of air conditioners; (5) develop and implement policies and procedures to ensure that HUD-funded projects and construction contracts are managed according to HUD rules and regulations, are adequately monitored, and grant charges comply with Federal cost eligibility requirements.

In addition, we recommend that HUD’s Associate General Counsel for Program Enforcement determine legal sufficiency and if legally sufficient, pursue civil remedies against the City, its principals, its contractor, or all of the above for incorrectly certifying to the integrity of the data or that due diligence was exercised during the approval of rehabilitation payments.

Issue Date: June 18, 2012
Audit Report No. 2012-FW-1009

Title: The Gonzales, TX, Housing Authority Generally Followed Recovery Act Public Housing Capital Fund Requirements

We audited the Gonzales Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund formula grant because it met the Office of Inspector General’s (OIG) most recent audit plan objective to contribute to the oversight objectives of the Recovery Act and the San Antonio Office of Public Housing recommended it for audit. Our objectives were to determine whether the Authority (1) properly obligated and spent its formula grant funds, (2) properly obtained its Recovery Act contracts, and (3) accurately reported its activities in a timely manner.

The Authority generally followed Recovery Act requirements with a minor exception. It (1) obligated the entire Recovery Act grant and spent all of the funds on eligible activities by the Recovery Act’s deadlines, (2) properly obtained most of its Recovery Act contracts, and (3) reported its activities accurately and in a timely manner. One minor error occurred when the Authority initially obligated funds for administrative expense but then used part of those funds for construction costs to renovate two vacant units, which resulted in its not obligating $7,600 by the deadline.

We recommend that the Director of the U.S. Department of Housing and Urban Development’s (HUD) San Antonio Office of Public Housing require the Authority to provide documentation for administrative expenses or repay HUD $7,600, which will be returned to the U.S. Treasury.

Issue Date: June 5, 2012
Audit Report No. 2012-LA-1007

Title: Los Angeles Neighborhood Housing Services, Los Angeles, CA, Did Not Always Properly Administer Its NSP2 Grant

We audited the Los Angeles Neighborhood Housing Services’ Neighborhood Stabilization Program 2 (NSP2). We performed the audit because American Recovery and Reinvestment Act of 2009 reviews are part of the Office of Inspector General’s (OIG) annual plan and Neighborhood Housing Services was awarded $60 million in Recovery Act NSP2 funds in a consortium agreement with 12 other organizations on February 11, 2010. Our audit objective was to determine whether Neighborhood Housing Services monitored its consortium members and ensured that its NSP2 expenditures were eligible and supported.

Neighborhood Housing Services did not implement internal controls to monitor its consortium members or ensure that its NSP2 expenditures were eligible and supported. Its policies and procedures for property acquisition and rehabilitation were effective; however, its policies for disbursements and expenditures, as well as its monitoring of consortium members, were ineffective. Neighborhood Housing Services’ inadequate internal controls resulted in no reconciliation of its NSP2 drawdowns to its expenditures, instances of improper payments to a consortium member and other vendors, an ineffective internal audit function, and no assurance that consortium members performed the NSP2-funded activities.

Therefore, we recommend that the Director of the Los Angeles Office of Community Planning and Development require Neighborhood Housing Services to (1) reconcile all NSP2 drawdowns to the expenses funded and repay any funds drawn for duplicate or non-NSP2-eligible expenses from non-Federal funds; (2) implement written procedures to ensure that its finance department follows all Federal regulations, including but not limited to ensuring that all drawndowns are tracked to the related expenditures and the U.S. Department of Housing and Urban Development’s (HUD) Disaster Recovery Grant Reporting system accurately reflects the amounts expended for each NSP2 activity; (3) implement written procedures to establish an effective internal audit function; (4) support the $30,000 paid to its consortium member or repay the amount from non-Federal funds; (5) repay the duplicate payment of $15,625 from non-Federal funds; and (6) revise and implement its monitoring policies and procedures to include monitoring all consortium members.

Issue Date: May 04, 2012
Audit Report No: 2012-DE-1004

Title: The Aurora, CO Housing Authority Did Not Always Follow Requirements When Obligating, Expending, and Reporting Information About Its Recovery Act Capital Funds

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General reviewed the Aurora Housing Authority to determine whether the Authority obligated its funds by the deadline, adequately managed its procurements and contracts, and accurately reported its Recovery Act information in FederalReporting.gov. We determined that the Authority did not obligate $22,018 of its Recovery Act funds by the March 17, 2010, deadline, adequately manage its Recovery Act procurements and contracts, or accurately report the number of vendor payments and jobs created in FederalReporting.gov.

We recommend that the Director of the Denver Office of Public Housing (1) recapture $22,018 in grant funds that was not obligated by the deadline (2) require the Authority to support the $206,377 in procurements and contracts and repay any amount not reasonable from non-federal funds, and (3) work with the U.S. Department of Housing and Urban Development (HUD) to make the applicable reporting changes in FederalReporting.gov.

Issue Date: April 9, 2012
Audit Report No: 2012-KC-1004

Title: The Manhattan, KS, Housing Authority Improperly Executed a Contract Change Order and Did Not Accurately Report on Its Recovery Act Funds

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Manhattan, KS Housing Authority’s administration of its Recovery Act capital fund grants. Our objectives were to determine whether the Authority executed a contract change order in compliance with HUD procurement regulations and the Authority’s procurement policy and accurately and completely reported Recovery Act grant information in FederalReporting.gov.

The Authority improperly executed a contract change order. In addition, it did not accurately or completely report Recovery Act grant information in FederalReporting.gov.

We recommend that the Director of HUD’s Kansas City Office of Public Housing work with the Authority to develop and implement written policies and procedures for executing a contract change order. We also recommend that the Director work with the Authority to support the $10,349 in contractor and subcontractor fees. For any portion of the fees that is not supported, HUD should reduce future annual capital funds. Lastly, we recommend that the Director work with the Authority to update its Recovery Act Web site, as appropriate, to reflect the correct program information.

Issue Date: April 5, 2012
Audit Report No: 2012-KC-1003

Title: The Topeka, KS, Housing Authority Did Not Always Document Its Procurement Actions and Did Not Accurately Report on Its Recovery Act Funds

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Topeka, KS Housing Authority’s administration of its Recovery Act competitive capital fund grants. We selected the Authority for review because it spent a large amount of Recovery Act funds. Our objectives were to determine whether the Authority expended Recovery Act grant funds in accordance with Recovery Act requirements and applicable HUD rules, met procurement requirements in selecting the developers for its mixed-finance projects, and reported Recovery Act grant information in Recovery.gov accurately and completely.

The Authority generally obligated and expended its Recovery Act funds in accordance with Recovery Act rules and regulations. However, it did not adequately document its selection of the Tennessee Town II developer. In addition, it did not accurately or completely report Recovery Act grant information in Recovery.gov.

We recommend that the Director of HUD’s Kansas City Office of Public Housing ensure that the Authority’s staff receives procurement training and the Authority develops and implements detailed operational procedures to strengthen existing procurement policies. We also recommend that the Director work with the Authority to update its Recovery Act Web site, as appropriate, to reflect the correct program information.

Date Issued: March 22, 2012
Audit Report No. 2012-DE-1003

Title: A Hotline Complaint Against Colorado Coalition for the Homeless, Denver, CO, Regarding Weaknesses in Its Controls Over the Homelessness Prevention and Rapid Re-Housing Program Could Not Be Supported

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the Colorado Coalition for the Homeless in response to a hotline complaint. The complaint contained allegations regarding control weaknesses, resulting in noncompliance with Homelessness Prevention and Rapid Re-Housing Program (HPRP) requirements. The objective of our review was to determine whether the allegations of weaknesses in the Coalition’s controls over its HPRP funds, resulting in noncompliance with HPRP requirements, could be substantiated. We did not find evidence to support the allegations made against the Coalition regarding its controls over its HPRP functions. This report contains no formal recommendations, and no further action is necessary.

Issue Date: March 15, 2012
Audit Report No. 2012-PH-1008

Title: Mountain CAP of WV, Inc., Buckhannon, WV, Did Not Administer Its Homelessness Prevention and Rapid Re-Housing Program in Accordance With Applicable Recovery Act and HUD Requirements

We audited Mountain CAP of WV, Inc.’s administration of its Homelessness Prevention and Rapid Re-Housing Program funds. We selected Mountain CAP for audit because of a complaint alleging that controls over its disbursements were weak. Our audit objective was to determine whether Mountain CAP maintained proper financial management of and accountability for its program to ensure that it used the funds according to the American Recovery and Reinvestment Act of 2009 and applicable HUD requirements.

We found that Mountain CAP did not maintain proper financial management of and accountability for its program. It did not: (1) have a financial accounting system that adequately identified the source and application of funds; (2) compare budgeted amounts to actual expenditures incurred by category; (3) report deviations from budget and program plans and, when necessary, request approval for budget revisions; and (4) properly maintain source documentation to support its accounting records. It also did not minimize the time it took to pay vendors.

We recommend that HUD require Mountain CAP to provide supporting documentation for program expenditures totaling $711,676 or reimburse HUD from non-Federal funds for any amount that it cannot support. We also recommend that HUD require Mountain CAP to improve its financial management system and procedures to ensure that it complies with all applicable Federal financial standard guidelines.

Issue Date: March 14, 2012
Audit Report No. 2012-PH-1006

Title: Gloucester Township, NJ, Did Not Always Administer Its Community Development Block Grant Recovery Act Funds According to Applicable Requirements

We audited Gloucester Township, NJ's administration of its Community Development Block Grant funds that it received under the American Recovery and Reinvestment Act of 2009. We selected the Township for an audit because we received two complaints alleging that it misused stimulus funds and overpaid for services and because of our mandate to audit Recovery Act activities. Our audit objective was to determine whether the Township obligated, expended, and reported its Block Grant funds provided under the Recovery Act according to the Recovery Act and applicable HUD requirements.

We found that the Township did not always administer its Block Grant Recovery Act funds in accordance with the Recovery Act and applicable HUD requirements. It did not (1) always maintain documentation to demonstrate that it competitively awarded contracts, (2) create contracts for sewer reconstruction work, (3) execute a subrecipient agreement and monitor the subrecipient, (4) ensure that contractors complied with the Davis-Bacon Act, and (5) accurately report information on the Federal reporting Web site. We found no evidence to substantiate the alleged misuse of Recovery Act funds. The overpayment for services alleged in the complaint was related to snow removal costs. The Township did not use Recovery Act funds to pay for these costs.

We recommend that HUD require the Township to (1) provide documentation to demonstrate that $28,850 expended on a sewer reconstruction project was fair and reasonable or reimburse its program from non-Federal funds for any amount that it cannot support, (2) obtain and review the contractor’s weekly payrolls related to its expenditures for the activities identified in the audit to ensure that contractors paid employees prevailing wages according to the Davis-Bacon Act, (3) develop and implement controls to ensure that it complies with all applicable procurement requirements, (4) develop and implement controls to ensure that it creates subrecipient agreements when needed and monitors its subrecipients, (5) develop and implement controls to ensure that contractors comply with Davis-Bacon Act requirements, and (6) report accurate job creation information for the reporting period ending March 31, 2012.

Issue Date: March 2, 2012
Audit Report No. 2012-KC-1002

Title: The East St. Louis Housing Authority Did Not Properly Manage or Report on Recovery Act Capital Funds

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the East St. Louis Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund program. Our audit objective was to determine whether the Authority (1) complied with applicable procurement requirements and properly managed its Recovery Act contracts, (2) properly drew down and expended funds for eligible activities, and (3) properly reported its Recovery Act activities.

We concluded that the Authority (1) improperly awarded Recovery Act-funded contracts, (2) improperly approved change orders, (3) did not enforce the fair labor standards prevailing wage rate requirements in its contracts, (4) paid for a Recovery Act contract before receiving U.S. Department of Housing and Urban Development (HUD) approval to obligate or expend the funds, (5) improperly drew down all of its administrative fees, and (6) reported incomplete and inconsistent information on the number of jobs created and the amounts expended on Recovery Act contracts. As a result, the Authority used Recovery Act funds for unsupported and ineligible expenses and failed to ensure that all contractors paid the appropriate wages, and its reported use of Recovery Act capital funds was not accurate.

We recommend that HUD require the Authority to (1) support that nearly $1.9 million in Recovery Act contracts and change orders was granted at a reasonable cost and repay any amount determined to be unreasonable, (2) collect $46,922 in overpaid funds from its contractor and return these funds to the U.S. Treasury, (3) ensure that contractors make any required wage restitution, and (4) provide documentation to support all administration expenses incurred or repay $132,322 to the U.S. Treasury for the unsupported expenses. In addition, HUD should require the Authority to correct the amounts reported in FederalReporting.gov and verify that its data entries meet Recovery Act reporting requirements.

Issue Date: March 1, 2012
Audit Report No. 2012-CH-1005

Title: The State of Wisconsin’s Department of Commerce Needs To Improve Its Oversight of Its Lead-Based Paint Hazard Control Recovery Act Grant

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the State of Wisconsin’s Department of Commerce’s Lead-Based Paint Hazard Control program under the American Recovery and Reinvestment Act of 2009. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the State for review based on a citizen’s complaint forwarded to our office from the U.S. Department of Commerce’s Office of Inspector General (OIG). Our objective was to determine whether the State ensured that its subrecipients (1) awarded Recovery Act grant funds to eligible property owners and (2) complied with the U.S. Department of Housing and Urban Development’s (HUD) and its own requirements.

The State did not always ensure that its subrecipients awarded Recovery Act grant funds to eligible property owners and complied with HUD’s and its own requirements. Specifically, it did not ensure that its subrecipients (1) awarded grant funds to property owners that were current with their property taxes, (2) ensured that property owners gave priority to families with a child under 6 years of age in the rental of housing units, (3) maintained sufficient or complete documentation to support that they performed independent price estimates before receiving bids for construction services, or (4) maintained sufficient documentation to support that six households were income eligible to receive grant funds. As a result, a State subrecipient inappropriately awarded $53,919 in grant funds to property owners that were not eligible to receive grant funds, and HUD and the State lacked assurance that families with a child under 6 years of age had priority in the rental of housing units that received Federal assistance.

The complainant’s allegations regarding the State’s Lead-Based Paint Hazard Control program, in particular the procurement of contracts for risk assessment services, were not substantiated by the results of this audit.

We recommend that the Director of HUD’s Office of Healthy Homes and Lead Hazard Control require the State to (1) reimburse its program $53,919 from non-Federal funds for the grant funds awarded and expended to assist the two ineligible property owners, (2) amend its implementation manual in accordance with its work plan to include the requirement that property owners’ property taxes be current, and (3) establish procedures and controls to ensure that property owners give priority in renting housing units for not less than 3 years following the completion of lead abatement activities to families with a child under 6 years of age.

Issue Date: February 23, 2012
Audit Report No. 2012-CH-1003

Title: The Springfield Housing Authority, Springfield, IL, Needs To Improve Its American Recovery and Reinvestment Act Contract Administration Procedures

We audited the Springfield Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus formula grant. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Authority based upon our analysis of risk factors relating to the housing agencies in Region V’s jurisdiction. Our objective was to determine whether the Authority administered its grant in accordance with Recovery Act, U.S. Department of Housing and Urban Development’s (HUD), and its requirements.

The Authority did not administer its grant in accordance with Recovery Act, HUD’s, and its requirements. Specifically, it did not ensure that its contractors purchased products that met Federal minimum energy efficiency standards and paid their employees the appropriate prevailing wage rates in accordance with the Davis-Bacon Act.

The Authority also did not ensure that it (1) charged more than $134,000 in Recovery Act funds to the correct accounts, (2) performed inspections of the construction work before issuing payments, and (3) approved purchases in accordance with HUD’s requirements and its policies and procedures. Further, the Authority did not obtain or maintain procurement documentation in accordance with HUD’s requirements and its own policies and procedures. However, the Authority accurately reported its Recovery Act progress and disbursed its grant funds in a timely manner in accordance with HUD’s requirements.

As a result of the Authority’s noncompliance, its contractors purchased nearly $87,000 in products that did not meet Energy Star standards and underpaid their employees by more than $4,300. Additionally, the Authority was unable to provide documentation to support more than $135,000 in wages, and HUD and the Authority lacked assurance that Recovery Act-funded contracts were properly procured and executed.

We recommend that the Director of HUD’s Chicago Office of Public Housing require the Authority to (1) reimburse nearly $87,000 from non-Federal funds to HUD for transmission to the U.S. Treasury, (2) pursue collection from the applicable contractors or reimburse the appropriate employees more than $4,300 from non-Federal funds, (3) support or reimburse more than $135,000 from non-Federal funds to HUD for transmission to the U.S. Treasury, and (4) implement adequate quality control procedures to address the findings cited in this audit report.

Issue Date: February 23, 2012
Audit Report No. 2012-AO-1001

Title: Opelousas Housing Authority, Opelousas, LA, Did Not Always Comply With Recovery Act and Federal Obligation, Procurement, and Reporting Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General initiated an audit of the Opelousas Housing Authority’s Public Housing Capital Fund Stimulus Recovery Act-funded grant as part of our annual audit plan. Our objective was to determine whether the Authority (1) followed the requirements of the Recovery and Reinvestment Act of 2009 when obligating its Recovery Act capital funds and when procuring contracts for goods or services, (2) properly expended its Recovery Act Capital Funds in accordance with the requirements and (3) accurately reported its Recovery Act activities.

The Authority did not properly obligate Recovery Act funds spent to purchase refrigerators, hot water heaters, and a window air conditioning unit. As related to the procurement of its Recovery Act architect’s contract, the Authority did not (1) ensure that it had adequate competition, (2) perform a cost or price analysis, and (3) prepare an independent cost estimate. This deficiency occurred because the Authority did not fully understand the obligation and procurement requirements. As a result, it incurred $188,038 in ineligible and $87,675 in unsupported costs.

In addition, the Authority did not always ensure that its Recovery Act expenditures were adequately supported with documentation such as hotel invoices and receipts for tenant reimbursements. This deficiency occurred because the Authority did not (1) follow its or the U.S. Department of Housing and Urban Development’s (HUD) written policies and procedures and (2) have adequate written accounting policies and procedures. As a result, it incurred $27,920 in unsupported costs.

Further, the Authority did not always report its Recovery Act activities in FederalReporting.gov accurately and in a timely manner; and submitted its final report before it spent all of its Recovery Act funds. This deficiency occurred because the Authority did not fully understand the Recovery Act requirements and did not obtain further clarification from HUD. As a result, it provided minimal transparency of and accountability for its Recovery Act-funded activities.

We recommend that HUD’s Director of Public Housing require the Authority to (1) repay $188,038 in ineligible costs, (2) support the cost reasonableness of the architect’s contract or repay any part of the $87,675 disbursed to the architect that it cannot support, and (3) support or repay $27,920 for unsupported expenditures. In addition, HUD should require the Authority to (1) periodically attend procurement training, (2) develop adequate, written accounting policies and procedures, (3) correct its reports for the first quarter of 2010 through the second quarter of 2011, as applicable, and (4) correct and resubmit its final report in the correct period.

Issue Date: January 27, 2012
Audit Report No. 2012-NY-1005

Title: The City of Newark, NJ, Had Weaknesses in the Administration of Its Homelessness Prevention and Rapid Re-Housing Program

We audited the City of Newark, NJ’s Homelessnes Prevention and Rapid Re-Housing Program (HPRP) in support of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) goal to review the expenditure of American Recovery and Reinvestment Act funds and contribute to improving HUD’s execution and accoutability of fiscal responsibilites. The audit objective was to determine whether City of Newark officials obligated and expended HPRP funds within prescribed timeframes and implemented adequate controls to ensure that grant awards complied with HPRP program requirements.

City of Newark officials expended funds within prescribed timeframes; however, they lacked adequate documentation to support that some funds were obligated in a timely manner, and expended funds for ineligible and unsupported costs. Specifically, City officials lacked support that $243,534 was properly obligated by the September 30, 2009 deadline, expended $38,330 for ineligible activities or participants, and expended $18,341 without adequate supporting documentation. In addition, subgrantee on-site monitoring was not conducted as specified by City policy. These deficiencies occurred because of control weaknesses in the administration of the City’s HPRP and City officials’ unfamiliarity with HUD regulations.

We recommend that the Director of HUD’s New Jersey Office of Community Planning and Development instruct City officials to (1) provide adequate documentation to support whether $243,534 was obligated in a timely manner (2) reimburse the HPRP line of credit for $38,330 expended for ineligible costs, (3) provide documentation to adequately support that $18,341 was expended for eligible costs, and (4) conduct onsite monitoring of the City’s subgrantees as specified in its HPRP guidelines.

Issue Date: January 26, 2012
Audit Report No.2012-CH-1001

Title: The Gallia Metropolitan Housing Authority, Bidwell, OH, Did Not Always Administer Its Grant in Accordance with Recovery Act and HUD Requirements

We audited the Gallia Metropolitan Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus (formula) grant. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Authority based upon our analysis of risk factors relating to the housing agencies in Region V’s (see footnote 1) jurisdiction and a request by the U.S. Department of Housing and Urban Development’s (HUD) Office of Public and Indian Housing. Our objective was to determine whether the Authority administered its grant in accordance with Recovery Act, HUD’s, and its requirements.

The Authority did not administer its grant in accordance with Recovery Act, HUD’s, and its requirements. Specifically, it (1) incorrectly stated in its solicitations for appliances both the make and model number of the appliances required instead of providing only a general description, (2) did not award a contract for 5 ranges to the lowest bidder, (3) purchased 143 ranges and 142 refrigerators when its plan stated that it would purchase 140 of each, (4) replaced 13 refrigerators and 10 ranges that still had useful life, and (5) did not accurately report in FederalReporting.gov the number of jobs created and retained. The problems occurred because the Authority lacked adequate procedures and controls regarding the administration of its grant funds to ensure that expenditures and grant reporting met Recovery Act, HUD, and its requirements. As a result, it improperly used $11,397 in formula grant funds contrary to program requirements, and its reporting of Recovery Act-funded activities on FederalReporting.gov was inaccurate.

We recommend that the Director of HUD’s Cleveland Office of Public Housing require the Authority to (1) reimburse $11,397 from non-Federal funds to HUD for transmission to the U.S. Treasury for the inappropriate use of the funds cited in finding 1 and (2) implement adequate procedures to ensure that its procurement policies are followed.

1 Region V includes the States of Indiana, Illinois, Ohio, Michigan, Minnesota, and Wisconsin.

Issue Date: January 26, 2012
Audit Report No.2012-CH-1002

Title: The Saginaw Housing Commission, Saginaw, MI, Did Not Administer Its Grant in Accordance With Recovery Act, HUD’s, and Its Requirements

We audited the Saginaw Housing Commission’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus formula grant. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Commission based upon our previous audits of the Commission’s use of Federal funds and a request to perform a comprehensive review of its programs from the U.S. Department of Housing and Urban Development’s (HUD) management. Our objective was to determine whether the Commission followed Recovery Act and HUD requirements regarding the administration of its Recovery Act grant.

The Commission did not administer its grant in accordance with Recovery Act, HUD’s, and its requirements. Specifically, it (1) inappropriately procured contracts, did not maintain documentation to show that contracts were correctly procured and that Davis-Bacon Act wages were correctly paid, and did not accurately report the number of rehabilitated units in HUD’s Recovery Act Management and Performance System (RAMPS); (2) spent more than $112,000 and obligated nearly $9,200 in Recovery Act funds for activities that were not included in its 5-year action plans or annual statements of performance and evaluation for the years 2009, 2010, and 2011; (3) did not ensure that opportunities to become employed or to receive employment training were provided to eligible Section 3 participants, failed to accurately report the number of its Section 3 new hires in FederalReporting.gov and did not ensure that more than $79,000 from its Recovery Act contracts was collected and remitted to its Section 3 training fund; (4) did not maintain adequate accounting records to support its administrative draws and expenditures; (5) incorrectly spent nearly $48,000 when it did not have a valid contract for architectural services because it amended an expired contract with its architect without competition; (6) overpaid more than $11,000 when it awarded a contract for floor tile replacement without full and open competition; and (7) used nearly $142,000 for the replacement of appliances without documenting the need for new appliances and incorrectly disposed of the appliances that were replaced.

We recommend that the Director of HUD’s Detroit Office of Public Housing require the Commission to (1) provide documentation or reimburse $530,536 from non-Federal funds to HUD for transmission to the U.S. Treasury, (2) reimburse $205,815 from non-Federal funds to HUD for transmission to the U.S. Treasury, (3) correct its Recovery Act overreporting of jobs in RAMPS and FederalReporting.gov, and (4) implement adequate procedures and controls to address the findings cited in this audit report.

Issue Date: January 26, 2012
Audit Report No. 2012-AT-1007

Title: The Shelby County, TN, Housing Authority Mismanaged Its HUD-Funded Programs

We audited the Shelby County Housing Authority in Memphis, TN, based upon an audit request from the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General for Investigation. The request included many areas of concern for both public housing operations and Section 8 Housing Choice Voucher program administration. Our objective was to determine whether the Authority complied with HUD requirements for administering its public housing program, including funds received under the American Recovery and Reinvestment Act of 2009, and its Section 8 Housing Choice Voucher program.

The Authority failed to administer its HUD-funded programs in accordance with requirements. We found indicators of noncompliance in every program area reviewed. The Authority did not comply with all requirements of its public housing consolidated annual contributions contract. Specifically, it willfully abandoned its Horton Gardens Apartments site, failed to protect tenants’ sensitive personally identifiable information, and failed to maintain complete and accurate records. As a result, the Horton Gardens appeared to be devalued, and tenants’ personal information was unnecessarily placed at risk.

The Authority did not comply with the “buy American” requirement, did not publicly advertise, and did not conduct an independent cost estimate for its only Recovery Act contract. In addition, it did not maintain records supporting fair and open competition for two other procurements. As a result, it expended its entire $315,372 Recovery Act grant for an ineligible procurement and could not support the eligibility of other expenditures totaling $13,692.

The Authority could not support that it met its 24-month obligation deadline requirement for $200,000 in unspent funds for its 2008 annual capital fund grant. As a result, $450,955 in fiscal years 2010 and 2011 capital funds risk being recaptured by HUD and redistributed to other public housing authorities.

The Authority mismanaged its Section 8 Housing Choice Voucher program. Management failed to ensure that existing internal controls were understood by staff and followed. This failure created an environment resulting in or contributing to significant areas of noncompliance, including (1) failure to support a determination of owner eligibility, (2) miscalculation of tenant income and utility allowances, (3) failure to determine rent reasonableness, (4) incomplete housing quality inspection forms, (5) failure to document head of household’s citizenship, and (6) failure to retain a copy of a lease agreement resulting in $12,679 in unsupported housing assistance payments.

These deficiencies occurred because management was either unaware of HUD regulations and its own procedures or chose to ignore them.

We recommend that the Director of the Memphis Office of Public Housing (1) determine whether the Authority should be declared in substantial default with its public housing consolidated annual contributions contract, 2) explore the feasibility of possible dissolution of the Authority or absorption of Authority activities by another public housing authority, (3) require the Authority to repay the U.S. Treasury $315,372 from non-Federal funds due to noncompliance with the “buy American” provision of the Recovery Act, (4) require the Authority to provide documentation to support that $200,000 in 2008 capital funds was properly obligated, and (5) require the Authority to properly train its staff on HUD Section 8 requirements as well as its own Section 8 policies and procedures.

We recommend that the Director of the Departmental Enforcement Center, in coordination with the Director of HUD’s Memphis Office of Public Housing, take appropriate administrative action against the Authority’s former executive director for badly mismanaging its operation.

Issue Date: January 13, 2012
Audit Report No. 2012-PH-1004

Title: Luzerne County, PA, Generally Administered Its Community Development Block Grant Recovery Act Funds According to Applicable Requirements

We audited Luzerne County, PA's administration of its Community Development Block Grant funds that it received under the American Recovery and Reinvestment Act of 2009. We selected the County for an audit because we received a complaint alleging that the County may have misappropriated Block Grant funds and because of our mandate to audit Recovery Act activities. Our audit objective was to determine whether the County obligated, expended, and reported its Block Grant funds provided under the Recovery Act according to the Recovery Act and applicable HUD requirements.

We found that the County generally administered its Block Grant Recovery Act funds in accordance with Recovery Act and applicable HUD requirements. However, a nonprofit subrecipient improperly awarded a contract for street improvements valued at $145,152, and the County did not screen subrecipients to prevent debarred, suspended, or ineligible subrecipients from participating in funded activities. We found no evidence to substantiate misappropriation of Recovery Act funds.

We recommended that HUD require the County to (1) provide documentation to demonstrate that $145,152 expended for street improvement work was fair and reasonable or reimburse its program from non-Federal funds for any amount that it cannot support, (2) provide training to its subrecipients on proper procurement procedures and the use of change orders, and (3) develop and implement controls to screen its subrecipients against the General Services Administration’s Excluded Parties List System.

Date Issued: January 9, 2012
Audit Report No. 2012-AT-1005

Title:The Housing Authority of the City of Fort Lauderdale, FL, Did Not Fully Comply With Federal Requirements When Administering Its Public Housing Capital Fund Recovery Grants

HUD OIG audited the Housing Authority of the City of Fort Lauderdale’s (Authority’s) administration of its Public Housing Capital Fund grants under the American Recovery and Reinvestment Act of 2009. This was an OIG-initiated audit in accordance with OIG’s 2010-2015 strategic plan to contribute to the effective use of Federal funds allocated by the Recovery Act. Our audit objective was to determine whether the Authority administered its Recovery Act capital funds in accordance with Federal requirements by assessing whether (1) its procurement process followed 24 CFR (Code of Federal Regulations) 85.36, (2) expenditures were eligible and supported, and (3) the information published on the Recovery Act Web site was accurate and supported.

The Authority did not fully comply with regulations when procuring goods and services for three contracts. Specifically, it did not perform or document independent cost estimates or cost or price analyses to ensure the reasonableness of contract amounts. This condition occurred because the Authority lacked controls to ensure that staff performed the required cost estimates and analyses. As a result, the U.S. Department of Housing and Urban Development (HUD) could not be assured of the reasonableness of $470,980 expended for the three contracts.

In addition, the Authority mismanaged its Recovery Act Capital Fund grants and did not follow Federal requirements when it failed to comply with obligation requirements, used funds to pay for ineligible and unsupported expenditures, and charged expenditures to the wrong work item. This noncompliance occurred because the Authority did not adequately plan the work of its force account labor and did not have sufficient management and financial controls. These deficiencies resulted in $321,627 in ineligible costs, $33,953 in unsupported costs, and $170,136 in funds to be put to better use.

Further, the Authority did not report accurate job and vendor information on the Recovery Act Web site. This inaccuracy occurred because of staff error and a lack of understanding of the reporting requirements. As a result, the Authority did not provide the public with accurate information on how Recovery Act dollars were spent.

OIG recommended that the Director of the Miami Office of Public Housing require the Authority to (1) provide documentation to support that the contract costs of $470,980 were reasonable; (2) repay $321,627 to the U.S. Treasury for work that was not approved in its annual statement and for work charged to Recovery Act grants that was paid for by another Federal grant; and (3) implement controls to ensure that Capital Fund expenditures are consistent with the work identified in its annual statement, that sufficient documentation is maintained to show the scope of work, work performed, specific location of work, total cost, and funding source used to pay for the work, and expenditures are properly classified to the correct work item account code.

Date Issued: January 6, 2012
Audit Report No. 2012-BO-1001

Title:The Housing Authority of the City of Hartford did not Properly Administer its $2.5 Million Recovery Act Grant Construction Management Contract

We audited the Housing Authority of the City of Hartford’s (the Authority’s) administration of its American Recovery and Reinvestment Act grant that funded a construction management contract based on a hotline complaint. Our objective was to determine if the Authority solicited, evaluated, and administered the $2.5 million grant funding and associated contract (the contract) properly and in accordance with federal requirements. We also visited a sample of sites to evaluate the impact the grant had on housing.

The Authority properly solicited and evaluated the construction management contract and generally improved housing conditions using its Recovery Act grant funds. However, it did not properly administer the management contract resulting in misuse of $415,692 that should have been used for physical improvements to better housing. This occurred in part because of the Authority’s decision to use more than $250,000 in administrative fees that HUD provided to administer this construction manager contact for paying costs of administering its state housing units. The use of fees for other purposes was allowed by HUD rules. However, this use reduced the funding meant for improving housing buildings and structures, which was instead spent on management contract fees. The Authority also paid profits that were not required by the contract, and for work that was unnecessary, unreasonable, or unsupported. The misuse of these funds had a real impact on housing improvements when only 38 of 102 boilers were replaced, and porches and a driveway included in the contract were not completed due to insufficient contract funds.

The Authority’s warranty inspection also failed to identify numerous and obvious defective items which if uncorrected will shorten the lifespan of some improvements. Further, the Authority did not conduct employee interviews to verify contractor workers were paid the wage rates required by law.

During the audit we observed some minor conditions that we addressed in a separate letter to management.

We are recommending that the Director of HUD’s Hartford Office of Public Housing require the Authority to; 1) repay more than $415,000 in ineligible, unreasonable, and unsupported costs, and 2) establish and implement controls to ensure contract payments are limited to budgeted and approved amounts, change orders are approved prior to initiating work and their price is negotiated, warranty items are identified and corrected in a timely manner, and employee interviews are completed to verify contractor workers are paid the required wages.

Date Issued: December 22, 2011
Audit Report No. 2012-AT-1003

Title: The City of Modesto, CA, Did Not Always Comply With Neighborhood Stabilization Program 2 Requirements

We audited the City of Modesto’s Neighborhood Stabilization Program 2 (NSP2). We performed the review because it was part of the Office of Inspector General’s (OIG) audit plan to conduct audits of NSP2 under the American Reinvestment and Recovery Act of 2009. We selected the City because it received $25 million and HUD’s San Francisco Office of Community Planning and Development requested that OIG consider a review of the City.

Program funds were not always used for eligible costs to acquire and rehabilitate properties. Specifically, the City approved ineligible project management fees and unsupported expenditures totaling $56,130 during rehabilitation. In addition, a city council member and a principal of one developer violated HUD’s and the City’s requirements when a company they co-own collected a commission of $62,500 in an NSP2 property purchase transaction. Lastly, the City used program funds of $51,936 to pay inappropriate real estate commissions based on unsigned addenda to purchase agreements.

We recommend that the Acting Director of HUD’s San Francisco Office of Community Planning and Development require the City to (1) adjust the loan amounts and developer contribution amounts for each of the properties affected by the $47,976 in ineligible project management fees and the $8,154 in unsupported rehabilitation costs and (2) reimburse its NSP2 grant $51,936 using non-Federal funds for the ineligible real estate commissions paid based on unsigned addenda to purchase agreements.

We also recommend that the Director of HUD’s Departmental Enforcement Center take administrative action against the city council member for the conflict-of-interest violation.

Date Issued: December 21, 2011
Audit Report No. 2012-SE-1002

Title: The Vancouver, WA, Housing Authority Did Not Always Manage or Report on Recovery Act Funds in Accordance With Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Vancouver Housing Authority to determine whether it was managing and reporting its three awarded Recovery Act Capital Fund grants in accordance with requirements. We selected the Authority because it was part of our annual audit plan, which includes reviewing funds provided under the American Recovery and Reinvestment Act of 2009.

The Authority did not manage the construction funded with Recovery Act Capital Fund grants in accordance with requirements. It paid for renovations that did not comply with Uniform Federal Accessibility Standards, for a roof that did not meet contract requirements, and for contracted work that was not completed. The Authority also approved change orders that did not meet U.S. Department of Housing and Urban Development requirements and allowed contractors to purchase goods manufactured outside the United States. In addition, the Authority did not accurately report the grant funds received or invoiced and the number of jobs created or retained in FederalReporting.gov.

We recommend that HUD require the Authority to correct the renovation deficiencies or repay as much as $1.26 million in grant funds. In addition, HUD should require the Authority to correct the amount of grant funds received or invoiced entered into FederalReporting.gov and develop and implement procedures to effectively monitor grant funds.

Date Issued: December 13, 2011
Audit Report No. 2012-NY-1004

Title:The City of Buffalo, NY, Did Not Administer Its Community Development Block Grant-Recovery Act Program Funds in Accordance With HUD Requirements

We audited the City of Buffalo’s administration of its supplemental Community Development Block Grant (CDBG) program funded under the American Recovery and Reinvestment Act of 2009. We selected the City based on concerns identified in our completed audit report of the City’s CDBG program.1 The objectives of the audit were to determine whether the City efficiently and effectively administered its CDBG-Recovery Act (CDBG-R) program in compliance with Recovery Act and other applicable requirements. Specifically, we wanted to determine whether City officials had adequate policies and procedures to ensure that (1) program funds drawn from HUD’s Line of Credit Control System were supported with adequate documentation and (2) CDBG-R program expenditures were for eligible activities that met a national objective of the program.

Date Issued: December 6, 2011
Audit Report No. 2012-AT-1003

Title: The Lumbee Tribe of North Carolina Did Not Follow Some Requirements for Its Native American Housing Block Grants Received Under the American Recovery and Reinvestment Act of 2009

We audited the Lumbee Tribe of North Carolina’s administration of its Native American Housing Block Grants received under the American Recovery and Reinvestment Act of 2009. We selected the tribe for audit because it received a $4.7 million formula grant and a $4 million competitive grant, the largest Native American Housing Block Grants awarded in North Carolina under the Recovery Act. Our objective was to determine whether the tribe administered its Native American Housing Block Grants in compliance with Recovery Act and other applicable requirements, specifically, whether it had (1) expended funds on a timely basis for eligible activities that were adequately supported, (2) followed Federal and tribal procurement requirements, and (3) followed Recovery Act reporting requirements.

Although the tribe followed most Recovery Act requirements, its program administration was deficient in some areas. The tribe (1) did not charge expenses to the correct grant, (2) requested duplicate reimbursement for the same mobile home rehabilitation, and (3) could not support the expenditure and jobs created figures in its most recent quarterly reports. These conditions occurred because the tribe had not implemented adequate financial controls to ensure that only eligible expenses were charged to the grants and did not follow all Recovery Act reporting requirements. As a result, it incurred $40,041 in ineligible expenses and did not accurately report Recovery Act accomplishments.

We recommend that the Administrator of the Eastern-Woodlands Office of Native American Programs require the tribe to (1) correct the $40,041 in expenses on the reimbursement requests, (2) identify any other ineligible expenses and submit corrected reimbursement requests, and (3) establish controls to ensure that accurate and supported information is included on the Recovery Act quarterly reports. We also recommend that the Administrator perform a follow-up review of the tribe’s identification of other ineligible expenses.

Date Issued:November 29, 2011
Audit Report No. 2012-DE-1002

Title: The Trinidad, Colorado Housing Authority Did Not Always Follow Requirements When Expending and Reporting Information About Its Recovery Act Capital Funds

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General reviewed the Trinidad Housing Authority to determine whether it obligated and expended its formula 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 obligated its Recovery Act funds in accordance with Recovery Act rules and regulations, but did not always expend the funds in accordance with Recovery Act rules and regulations. Specifically, it did not perform cost estimates before receiving bids or proposals on its Recovery Act contracts and procurements. Additionally, the Authority used Recovery Act funds to purchase five refrigerators that it did not use. The Authority accurately reported the number of jobs created, but it did not accurately report required Recovery Act grant information in FederalReporting.gov.

We recommend that the Director of the Denver Office of Public Housing (1) provide technical assistance to the Authority to ensure it understands that it is required to perform cost estimates before receiving bids or proposals, (2) require the Authority to send its procurement staff to training to improve proficiency in the procurement process, (3) require the Authority to provide support to show that the costs were reasonable for its Recovery Act Capital Fund contracts and procurements, (4) require the Authority to develop and implement procedures to properly manage its equipment purchases, (5) require the Authority to repay $2,360 to the U.S. Department of Housing and Urban Development (HUD) for one missing and four inoperable refrigerators, and (6) require the Authority to provide documentation to support the costs it reported in FederalReporitng.gov.

Date Issued: November 21, 2011
Audit Report No. 2012-FW-1003

Title: The Housing Authority of the City of Little Rock, AR, Generally Complied With Recovery Act Funding Requirements

We audited the Housing Authority of the City of Little Rock’s American Recovery and Reinvestment Act of 2009 funding. The Authority received more than $6.5 million in Recovery Act funds through three grants: one formula and two competitive. Our objectives were to determine whether the Authority (1) obligated and expended its Recovery Act funding in accordance with HUD rules and regulations and (2) followed Recovery Act reporting requirements.

The Authority generally complied with Recovery Act requirements. However, it did not always follow the Buy American provision or reporting requirements. Specifically, the Authority purchased $31,725 in products manufactured and assembled outside the United States for Recovery Act-funded projects. Also, for one grant, the Authority did not accurately report the number of jobs created.

We recommended that the Arkansas Director of Public Housing require the Authority to repay $31,725 from non-federal funds that was misspent on products manufactured and assembled outside the United States and implement controls to prevent future occurrences. Also, the Authority should correct the number of jobs created in its next quarterly report.

Date Issued: October 24, 2011
Audit Report No. 2012-PH-1001

Title: Healthy Neighborhoods, Inc., Baltimore, MD, Generally Ensured That Its Consortium Members Met Recovery Act Requirements

We audited Healthy Neighborhoods, Inc.’s Neighborhood Stabilization Program 2 based on a complaint received by our office and as part of our annual audit plan to review activities funded by the American Recovery and Reinvestment Act of 2009. The grantee received $26 million in Program funds under the Recovery Act. Our objective was to determine whether the grantee ensured that its consortium members properly awarded Program contracts and resold homes according to the requirements of the Recovery Act and applicable HUD regulations. We found that the grantee generally ensured that its consortium members properly awarded Program contracts and resold homes according to the requirements of the Recovery Act and applicable HUD regulations. However, the grantee had to provide additional documentation. The grantee also ensured home buyers met income eligibility requirements. We recommended that HUD require the grantee to develop and implement controls to make sure that it (1) adequately monitors its developers to ensure that Program requirements are followed, and (2) establishes an internal audit function as required.

Date Issued: October 24, 2011
Audit Report No. 2012-AT-1001

Title: The Municipality of San Juan, PR, Generally Complied With Homelessness Prevention and Rapid Re-Housing Program Requirements

We audited the Municipality of San Juan Homelessness Prevention and Rapid Re-Housing Program. The audit was in accordance with our audit plan to review funds provided under the American Recovery and Reinvestment Act of 2009. We selected the Municipality based on the large amount of Program funds approved. Our objective was to determine whether the Municipality ensured that its Program complied with Recovery Act and U. S. Department of Housing and Urban Development (HUD) program expenditure and reporting requirements.

The Municipality generally administered its Program in accordance with HUD requirements. However, it did not correctly report the number of jobs created or retained with Program funds. As a result, the public was not provided with complete and accurate information about the jobs funded by the Recovery Act.

We recommend that HUD require the Municipality to review and correct any inaccurate information reported on the Federal reporting Web site and develop and implement procedures to ensure complete and accurate reporting in accordance with Section 1512 of the Recovery Act.

Date Issued: October 18, 2011
Audit Report No. 2012-NY-1002

Title: The City of New York, NY, Charged Questionable Expenditures to Its Homelessness Prevention and Rapid Re-Housing Program

We completed an audit of the City of New York, NY (City), pertaining to its administration of its Homelessness Prevention and Rapid Re-Housing Program (HPRP) funded under the American Recovery and Reinvestment Act of 2009. Our audit objectives were to determine whether City officials (1) disbursed HPRP funds efficiently and effectively in accordance with HUD and other applicable requirements; (2) had a financial management system in place to adequately safeguard the funds; and (3) adequately monitored their subgrantees to ensure compliance with Recovery Act requirements, HPRP guidelines, and other applicable HUD regulations.

City officials did not always follow applicable HUD regulations in administering the City’s HPRP. Specifically, they (1) disbursed HPRP funds for questionable rental assistance payments and salary expenditures, and (2) did not adequately monitor subgrantees. As a result, program funds were used for ineligible rental assistance and unsupported administrative salaries. Consequently, City officials could not assure HUD that all HPRP disbursements complied with HUD rules and regulations.

We recommend that the Director of HUD’s New York City Office of Community Planning and Development instruct City officials to (1) reimburse from non-Federal funds $93,436 for ineligible costs pertaining to questionable rental assistance, (2) provide documentation to justify $329,937 in unsupported salary expenses, and (3) strengthen subgrantee monitoring procedures to ensure that all policies and procedures are implemented, thus complying with HPRP requirements.

Date Issued: October 14, 2011
Audit Report No. 2012-SE-1001

Title: The Bellingham Whatcom County Housing Authorities, Bellingham, WA, Generally Complied with Recovery Act Capital Fund Grant Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Bellingham Whatcom County Housing Authorities to determine whether expenditures for American Recovery and Reinvestment Act of 2009 Capital Fund Grants were appropriate, eligible, and adequately supported and whether related procurements were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and Recovery Act requirements. We selected the Authorities because they received almost $11 million of these funds.

The Authorities generally ensured that Recovery Act Capital Fund Grant expenditures were appropriate, eligible, and adequately supported and that materials and services were properly procured. The report contains no recommendations and no further action is necessary.

Date Issued: October 12, 2011
Audit Report No. 2012-FW-1002

Title: The Housing Authority of the City of Corpus Christi, TX, Generally Administered Recovery Act Capital Funds in Compliance With the Recovery Act

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009, we audited the Public Housing Capital Fund Stimulus (formula) Recovery Act-funded activities of the Corpus Christi Housing Authority in Corpus Christi, TX. Our objective was to determine whether the Authority expended Recovery Act funds in accordance with Recovery Act rules and regulations and submitted timely Recovery Act performance reports.

Generally, the Authority complied with Recovery Act requirements. However, it used more than $6,000 in Recovery Act funds for ineligible and unsupported purposes including (1) the purchase of furniture that was not made in America and other furniture, the origin of which was unclear; (2) incidental relocation expenses that it did not support with receipts; and (3) general purpose office supplies. In addition, the Authority could better use more than $2,000 in misallocated Recovery Act salary expenses and impending ineligible relocation expenses. It also submitted one late quarterly performance report. These minor exceptions occurred because the Authority’s program staff was not aware of Recovery Act requirements and the Authority had not implemented effective controls over cost eligibility, cost allocation, and payroll processing. The late performance report was caused by competing work priorities.

We recommend that the Director of the U. S. Department of Housing and Urban Development’s (HUD) Office of Public Housing require the Authority to develop and implement effective controls over its Recovery Act activities to ensure that (1) its payroll processing, purchasing, cost eligibility, and cost allocation comply with Recovery Act and HUD requirements; (2) its staff is aware of program requirements; and (3) only allowable costs are charged to program accounts. Also, the Authority should use non-Federal funds to reimburse $2,173 to the U. S. Treasury, including $660 for furniture that was not made in America in violation of program requirements, $1,450 for ineligible relocation payments, and $63 for ineligible office supplies. Further, the Authority should provide support showing that furniture at Ruthmary Price was made in America or reimburse $4,302 to the U. S. Treasury. Finally, the Authority should change its relocation policy so that it does not incur an additional $1,450 in ineligible relocation payments and reallocate $411 in Recovery Act salaries that it misallocated to the low-rent program and $557 that it misallocated among other Federal and non-Federal programs as indicated by employee timesheets.

Issue Date: October 4, 2011
Audit Report No. 2012-NY-1001

Title: Bergen County, NJ, Generally Administered Its Homelessness Prevention and Rapid Re-Housing Program in Accordance With HUD Regulations

We audited Bergen County, NJ’s administration of its Homelessness Prevention and Rapid Re-Housing Program (HPRP) in support of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) goal to review the expenditure of American Recovery and Reinvestment Act funds and contribute to improving HUD’s execution and accoutability of fiscal responsibilites. The audit objective was to determine whether Bergen County officials obligated and expended HPRP funds within prescribed timeframes and implemented adequate controls to ensure that grant awards complied with HPRP program requirements.

Bergen County officials generally administered the HPRP grant funds in accordance with HUD regulations. Specifically, the officials obligated and expended funds within required timeframes and generally disbursed grant funds for eligible activities and complied with program financial and administrative requirements. While some participant files did not contain all required documentation and a $500 grant was erroneously awarded, County officials had taken action to address these issues.

We recommend that the Director of HUD’s Newark Office of Community Planning and Development instruct County officials to strengthen the County’s administrative controls to ensure that participant case files include all required supporting documentation and monitoring reviews of subgrantees are conducted regularly.

Issue Date: September 30, 2011
Audit Report No. 2011-FO-0006

Title: American Recovery and Reinvestment Act of 2009 Grantees Met Initial Expenditure Requirements, but HUD Should Return Recaptured Funds to the U.S. Treasury and Ensure That Grant Closeout Procedures Comply With the Act

We audited the U.S. Department of Housing and Urban Development’s (HUD) compliance with initial expenditure requirements related to six programs funded by the American Recovery and Reinvestment Act of 2009 (ARRA). The objectives of our audit were to determine whether (1) HUD grantees complied with their initial expenditure requirements; (2) recaptures were properly recorded and controls over the recapture process existed and complied with the Pay It Back Act; and (3) ARRA funds control plans were appropriately modified to include Pay It Back Act requirements.

Our review determined that HUD met the initial expenditure requirements for five of the six ARRA programs under review. Additionally, the remaining program was on track to meet its initial expenditure requirement by its specific expenditure deadline. However, HUD had $20.85 million in recaptured ARRA funds that must be returned to the U.S. Treasury’s general fund. Additionally, $6.2 million in available funds, which were recaptured before the Pay It Back Act, had not been reallocated and should be sent back to the U.S. Treasury.

We also found that the grant closeout process for two of the six programs may have caused noncompliance with ARRA. Lastly, we found that funds control plans for the selected programs had not been modified to include Pay It Back Act requirements, or modifications had not been reviewed and approved by OCFO.

We recommend that OCFO immediately return $20.85 million in recaptured ARRA funds to the U.S. Treasury general fund in accordance with the Pay It Back Act. Additionally, we recommend that TCAP immediately recapture $6.2 million in deobligated funds to ensure immediate return to the U.S. Treasury. Further, we recommend that HUD direct the ARRA program offices to review and, if necessary, revise grant closeout and fund retention policies and procedures to ensure that funds are expended or recaptured in accordance with ARRA requirements. Finally, we recommend that OCFO review all ARRA funds control plans to determine whether the plans have been appropriately modified and approved to include Pay It Back Act requirements.

Issue Date: September 30, 2011
Audit Report No. 2011-CH-1015

Title: The Springfield Metropolitan Housing Authority, Springfield, OH, Did Not Administer Its Grant in Accordance With Recovery Act and HUD Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Springfield Metropolitan Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus (formula) Recovery Act Funded grant. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Authority for audit based on the Office of Inspector General’s (OIG) commitment to ensure the proper use of Recovery Act grant funds. Our objective was to determine whether the Authority administered its capital grant in accordance with Recovery Act and U.S. Department of Housing and Urban Development (HUD) requirements.

The Authority did not administer its Capital Fund grant in accordance with Recovery Act and HUD requirements. Specifically, it did not (1) properly obligate $152,000 in Recovery Act grant funds for eligible management improvement costs, and (2) adequately monitor its contractors for the enforcement of labor standards. The problems occurred because the Authority lacked adequate procedures and controls regarding the administration of its grant funds to ensure that obligations and expenditures met HUD and the Recovery Act requirements. Additionally, it lacked adequate procedures and controls to ensure that it complied with HUD’s and its own requirements for the administration of contracts. As a result, it improperly obligated $152,000 in formula grant funds contrary to HUD’s requirements and its reporting of Recovery Act funded activities on FederalReporting.gov was inaccurate.

We recommend that the Director of HUD’s Cleveland Office of Public Housing require the Authority to (1) implement adequate procedures and controls regarding the administration of its Recovery Act grant funds, (2) provide supporting documentation or reimburse HUD $110,580 for wages paid to its contractors, (3) review all payments to its contractors’ employees to determine whether wage restitution is owed and provide the review results to HUD for review and approval. If wage restitution is required, the Authority should make the restitution from non-Federal funds, and (4) implement adequate procedures and controls regarding its contracting process to ensure that its contractors’ employees are paid the appropriate Federal prevailing wage rates. These procedures and controls would include but not be limited to reviewing contractors’ weekly certified payrolls, maintaining full documentation such as weekly payrolls and copies of wage determinations, and making any applicable changes or modifications needed to comply with Davis-Bacon Act.

We also recommend that the Director of HUD’s Cleveland Office of Public Housing recapture $152,000 in Recovery Act capital funds that was improperly obligated for ineligible management improvement expenses for transmission to the U.S. Treasury. As of September 27, 2011, HUD is in the process of recapturing the funds.

Issue Date: September 30, 2011
Audit Report No. 2011-CH-1018

Title: The Pontiac Housing Commission, Pontiac, MI, Did Not Adequately Administer Its American Recovery and Reinvestment Act Capital Fund Grant

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Pontiac Housing Commission’s Public Housing Capital Fund Stimulus (formula) Recovery Act Funded grant. The audit was part of the activities in our fiscal year 2010 annual audit plan. We selected the Commission for review as part of the Office of Inspector’s General’s commitment to ensure the proper use of Recovery Act funds. Our objective was to determine whether the Commission properly obligated and expended its formula grant and related procurements complied with U.S. Department of Housing and Urban Development (HUD) and Recovery Act requirements.

The Commission’s Recovery Act obligations and expenses were not properly supported, and its related procurements did not comply with HUD’s and its own requirements. Specifically, the Commission did not (1) ensure that its contractors complied with the Davis-Bacon Act, (2) comply with Federal and its contract administration requirements, and (3) properly administer and account for vacant unit turnovers by its force account.

Further, the Commission created a conflict-of-interest relationship when it awarded a carpet installation contract to an employee. This condition occurred because the Commission lacked adequate procedures and controls to ensure that it complied with HUD’s and its own procurement and contract administration requirements. As a result, the Commission used more than $148,000 in Recovery Act grant funds contrary to its annual contributions contract with HUD and its own procurement requirements, and HUD lacked assurance that the Commission effectively managed its grant.

We recommend that the Director of HUD’s Detroit Office of Public Housing require the Commission to obtain certified weekly payrolls from the 8 contractors identified and determine whether the contractors paid the correct wage rates to their employees. If the contractors failed to pay the correct wages owed to their employees, the Commission should pay wage restitution to these employees. HUD should also require the Commission to (1) pay wage restitution of $4,357 to its two contractors’ employees and submit proof that the employees received the wage restitution, (2) develop written procedures for the enforcement of labor standards to ensure compliance with its own requirements regarding the enforcement of labor standards, (3) maintain a system of contract administration to ensure that its contractors perform in accordance with their contracts, (4) obtain missing contract administration documents and retain them in the contract files, (5) pay wage restitution of $66,210 to its force account staff and provide proof that the payments were made, (6) identify the specific units assigned to each maintenance staff member for phase II unit turnover work and to the contractor for phase III unit turnover work and provide support, and (7) reimburse HUD $38,027 from non-Federal funds for transmission to the U.S. Treasury for the inappropriate use of grant funds.

We also recommend that the Director of HUD’s Detroit Office of Public Housing (1) prohibit the use of force account labor for any future unit turnover work until the Commission can demonstrate that it has the capacity to perform the work (2) follow established procedures for addressing public housing authorities designated as substandard physical, including but not limited to, amending the Commission’s existing memorandum of agreement with HUD to incorporate the recommendations cited in this audit report, and (3) recapture all funds that the Commission obligated for unit turnovers by its force account. This amount includes the work item for cycle painting and carpet removal work by its force account for $24,149, the $15,933 of improper obligations due to the Commission’s conflict-of-interest relationship that has not been spent and repairs to its sidewalk, driveway, and brickwork for transmission to the U.S Treasury.

Issue Date: September 30, 2011
Audit Report No. 2011-CH-0003

Title: The Office of Healthy Homes and Lead Hazard Control Needs To Improve Its Monitoring of American Recovery and Reinvestment Act Grant Recipients

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Office of Healthy Homes and Lead Hazard Control’s monitoring of its American Recovery and Reinvestment Act of 2009 grant recipients. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected Healthy Homes for audit based upon an internal audit suggestion regarding Healthy Homes’ monitoring of its grant recipients related to the Recovery Act. Our objective was to determine whether Healthy Homes monitored its recipients of Recovery Act grants in accordance with Recovery Act and HUD requirements.

Healthy Homes did not maintain documentation in accordance with its requirements to support payments to four recipients totaling more than $4.2 million of the nearly $5 million in grant awards. The payments were made to reimburse the recipients for their claimed grant expenses. Additionally, Healthy Homes did not review the voucher requests for payments in a timely manner.

Documentation to support the recipients’ voucher requests for payment was either missing or not adequate. Healthy Homes accepted operating ledgers, billing summaries, email lists, a list of expenditures, budgets showing the current request by category, and copies of check stubs as support for the voucher requests for payment.

Healthy Homes also did not ensure that recipients’ working file included the required documents and reports such as annual and quarterly documents and reports.

We recommend that HUD’s Director of Healthy Homes and Lead Hazard Control (1) obtain adequate documentation to support the payment of $4,247,991 in Recovery Act funds as cited in this finding, (2) ensure that recipients’ voucher requests for payment are reviewed in a timely manner, (3) implement adequate procedures and controls to correct voucher processing deficiencies, and (4) implement adequate policies and procedures to ensure that recipients’ files contain the documentation and reports required by Healthy Homes’ issued guidance.

Issue Date: September 29, 2011
Audit Report No. 2011-AO-1008

Title: The Tennessee Valley Regional Housing Authority, Corinth, MS, Generally Ensured That Its Public Housing Capital Fund Grant Complied With Recovery Act Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General initiated an audit of the Tennessee Valley Regional Housing Authority’s (Authority) Public Housing Capital Fund Stimulus Formula Recovery Act Funded grant program as part of our annual audit plan to review American Recovery and Reinvestment Act of 2009 funds. Our objective was to determine whether the Authority properly obligated and expended its Recovery Act capital funds in accordance with requirements, followed Recovery Act requirements when procuring contracts for goods and services, and accurately reported its Recovery Act activities.

The Authority generally complied with Recovery Act requirements in the obligation and expenditure of its Recovery Act capital funds, and its procurements were made in accordance with Federal and Recovery Act requirements. The Authority also properly reported Recovery Act Capital Fund grant information in federalreporting.gov.

This report does not contain recommendations as it contains no findings.

Issue Date: September 29, 2011
Audit Report No. 2011-AO-1007

Title: Jefferson Parish Housing Authority, Marrero, LA, Did Not Always Comply With Public Housing Capital Fund Stimulus Recovery Act Obligation, Procurement, and Reporting Requirements

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General initiated an audit of the Jefferson Parish Housing Authority’s (Authority) Public Housing Capital Fund Stimulus (formula) Recovery Act-funded grant as a part of our annual audit plan and goal to review funds provided under the American Recovery and Reinvestment Act of 2009. Our objective was to determine whether the Authority followed Recovery Act requirements. Specifically, we wanted to determine whether it (1) expended Recovery Act funds in accordance with requirements, (2) maintained inventory controls over its fixed assets to ensure that Recovery Act funds were used efficiently, (3) obligated Recovery Act funds in accordance with requirements, (4) followed the Recovery Act requirements when procuring goods or services, and (5) accurately reported its Recovery Act activities.

The Authority generally ensured that it followed Recovery Act requirements when expending Recovery Act funds and maintaining inventory controls over its fixed assets, although we identified minor deficiencies in these areas. However, it did not properly obligate part of its Recovery Act funding by the obligation deadline and made purchases in excess of its need. In addition, the Authority did not always properly conduct its Recovery Act procurements. We attribute these issues to the Authority (1) not understanding the Recovery Act obligation requirements, (2) not being aware of the applicable Federal cost principles related to allowable costs, (3) not following its own procurement policies and procedures, and (4) not following Recovery Act procurement requirements. Consequently, it incurred $79,511 in ineligible and $30,000 in unsupported costs and could not provide reasonable assurance that Recovery Act funds were used effectively and efficiently or to benefit program participants.

The Authority did not always completely or accurately report its Recovery Act activities and submitted its final Recovery Act report before it expended all of its Recovery Act funds. We attribute these issues to the Authority not understanding the Recovery Act reporting process and not providing adequate oversight of its contractor. Consequently, the public did not have access to accurate information, and the Authority’s use of Recovery Act funds was not transparent.

We recommend that the U.S. Department of Housing and Urban Development’s (HUD) Director of Public Housing require the Authority to (1) repay $79,511 in ineligible costs, and (2) support $30,000 or repay any amounts it cannot support. In addition, as related to its Federalreporting.gov submissions, HUD should require the Authority to (1) correct inaccurate data entered for the third and fourth quarters of 2009 and the first, second, and third quarters of 2010 and (2) correct and resubmit its final report in the correct reporting period, and submit the missing reports for the fourth quarter of 2010 and first quarter of 2011.

Issue Date: September 28, 2011
Audit Report No. 2011-PH-1016

Title: The Philadelphia Housing Authority, Philadelphia, PA, Did Not Have Conflicts of Interest Related to Recovery Act Rehabilitation but Failed To Comply With Financial Disclosure Requirements

We audited the Philadelphia Housing Authority’s compliance with the U.S. Department of Housing and Urban Development’s (HUD) conflict-of-interest and financial disclosure requirements as a result of the Authority’s initial failure to comply with an Office of Inspector General (OIG) subpoena during a previous American Recovery and Reinvestment Act of 2009 audit. (HUD OIG audit report number 2011-PH-1010, “The Philadelphia Housing Authority, Philadelphia, PA, Failed To Support Payments and Improperly Used Funds From the American Recovery and Reinvestment Act of 2009,” dated May 17, 2011). This audit was needed to evaluate information we later obtained from the Authority as a result of the United States District Court’s summary enforcement of the subpoena. The audit objective addressed in this report was to determine whether there were any apparent conflicts of interest involving responsible Authority employees and contractors that performed Recovery Act-funded rehabilitation of the Authority’s scattered site housing units and whether the Authority complied with mandatory financial disclosure reporting requirements.

The information we obtained from enforcement of the OIG subpoena did not indicate the existence of any apparent conflicts of interest involving Authority employees and the contractor or subcontractors that completed Recovery Act-funded rehabilitation of the Authority’s scattered site housing units. The audit did show, however, that the Authority did not comply with provisions in its Moving to Work Demonstration program agreement with HUD that required it to comply with State and local laws because it failed to comply with financial disclosure provisions in the Pennsylvania Public Official and Employee Ethics Act.

We recommend that HUD require the Authority (1) take immediate action to ensure that appropriate employees and board members file the required financial disclosures for calendar year 2010 and for the year following their termination of service and (2) fully implement and enforce the financial disclosure statement policies and procedures approved by its board on July 22, 2011.

Issue Date: September 28, 2011
Audit Report No. 2011-AT-1019

Title: The Alabama Department of Economic and Community Affairs, Montgomery, AL, Used Homelessness Prevention and Rapid Re-Housing Program Funds for Ineligible and Unsupported Purposes

HUD OIG performed an audit of the State of Alabama Department of Economic and Community Affairs, Homelessness Prevention and Rapid Re-Housing Program in Montgomery, Alabama. The audit was part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) annual audit plan to review grant activities funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected the grantee because it received $13.1 million, which was the largest single Program grant awarded within Alabama under the Recovery Act. In addition, the HUD Birmingham Office of Community Planning and Development had not conducted a monitoring review of the grantee. The objective of the audit was to determine whether the grantee administered the grant in compliance with the Recovery Act and other applicable regulations to ensure that (1) it properly reported results on the Recovery.gov Web site, (2) it properly monitored its subgrantees, and (3) program participants and activity expenditures were eligible and their eligibility was supported.

The grantee adequately reported results on the Recovery.gov Web site. However, it did not ensure that its subgrantees’ Program participants and activity expenditures were eligible and their eligibility was supported. As a result, the grantee missed opportunities to detect and prevent errors by its subgrantees on a timely basis. Consequently, Program funds totaling $69,036 were paid for participants who were not eligible or whose eligibility was not supported.

OIG recommended that the Director of HUD’s Birmingham Office of Community Planning and Development require the grantee to repay the U.S. Treasury account from non-Federal funds the ineligible costs of $1,075 charged to its Program and properly support the $67,961 charged to its Program or repay the U.S. Treasury account from non-Federal funds the amount that it cannot support.

Issue Date: September 27, 2011
Audit Report No. 2011-HA-0004

Title: HUD Could Not Identify Whether Its Properties Had Been Included in the Recovery Act Weatherization Assistance Program

We audited the Office of Sustainable Housing and Communities’ implementation of the U.S. Department of Housing and Urban Development’s (HUD) partnership with the U.S. Department of Energy (DOE) to coordinate Federal weatherization efforts nationwide. This audit was part of our fiscal year 2010 audit plan. Our objective was to determine whether HUD multifamily properties were eligible to receive American Recovery and Reinvestment Act funding under DOE’s Weatherization Assistance Program.

We could not answer our objective because HUD did not have records on which properties had been weatherized. Although HUD entered into a memorandum of understanding with DOE to improve energy efficiency in its qualified housing properties, HUD did not require DOE to provide data on which HUD qualified housing properties had been selected to be weatherized. Specifically. HUD did not require DOE to report which HUD properties participated in the weatherization program. This condition occurred because HUD did not define or communicate its expectation for measuring whether its properties had been weatherized. As a result. HUD could not identify improved properties or cost savings achieved through reduced energy-costs.

We recommend that the Director of the Office of Sustainable Housing and Communities request reports from DOE that identify which HUD qualified housing properties have been weatherized.

Issue Date: September 26, 2011
Audit Report No. 2011-DE-1005

Title: The State of Montana Generally Used Its CDBG-R Recovery Act Funds in Compliance With Requirements but Improperly Negotiated and Serviced Loans

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, reviewed the State of Montana’s Community Development Block Grant-Recovery (CDBG-R) program, based on HUD’s concern with the State directly loaning CDBG-R funds to entities and because of our focus on the administration of American Recovery and Reinvestment Act funds. The objective of our review was to determine whether the State used its CDBG-R funds in accordance with the Recovery Act rules and regulations.

The State generally used its CDBG-R funds in compliance with Recovery Act rules and regulations. However, it incorrectly negotiated and serviced loans with the final recipients of the funds. The State decided to directly handle these high-risk loans instead of placing the risk on the nonprofits with which the counties contracted for this function. Since the State serviced the loans, the nonprofits did not have direct access to the program income generated by the CDBG-R loans.

We recommend that the Director of HUD’s Denver Office of Community Planning and Development require the State to transfer the loan servicing of the CDBG-R loans to the pertinent nonprofits.

Issue Date: September 26, 2011
Audit Report No. 2011-LA-1019

Title: The Housing Authority of the County of San Bernardino, CA, Did Not Adequately Complete All Procurements for Its Recovery Act Capital Fund Grants in Accordance With HUD Requirements

We audited the Housing Authority of the County of San Bernardino’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund formula and competitive grants. We performed the audit because Recovery Act reviews are part of the Office of Inspector General’s (OIG) annual plan and the Los Angeles Office Public Housing’s 2011 risk assessment rated the Authority as high risk based on data from the Authority’s most recent Real Estate Assessment Center physical inspections and Financial Data Schedule submission. Our audit objective was to determine whether the Authority completed procurements for Recovery Act capital funds in accordance with 24 CFR (Code of Federal Regulations) Part 85 and U.S. Department of Housing and Urban Development (HUD) Recovery Act requirements.

The Authority did not complete all procurements for its Recovery Act capital funds in accordance with 24 CFR Part 85 and HUD Recovery Act requirements. Specifically, it procured one vendor through noncompetitive procurement without adequate justification, and the related contracts were missing 5 of 13 required provisions. In addition, we identified an expired assurance of completion for ongoing work, a lack of backup documentation for the independent cost estimates in two of the files reviewed, and a control weakness in the Authority’s process for approving change orders. Therefore, the Authority may have spent more Recovery Act money toward its projects than it would have had it completed proper procurement procedures.

As a result, we recommend that the Director of HUD’s Los Angeles Office of Public Housing require the Authority to (1) support the reasonableness of the $247,834 contracted through noncompetitive procurement or repay the Recovery Act funding expended thus far and ensure that no additional Recovery Act funding is disbursed under the contracts, (2) amend the ongoing noncompetitive procurement contracts to include the missing contract provisions, (3) implement a policy to ensure that its procurement and contracts manager reviews all contracts before they are executed, (4) implement controls to ensure that assurance of completion documents are obtained and valid for the duration of an ongoing contract, (5) implement controls to ensure that all contractor backup documentation is retained and accessible, and (6) implement controls to ensure that all documents requiring signature are approved by multiple parties as intended and that one person does not sign on multiple lines.

Issue Date: September 22, 2011
Audit Report No. 2011-LA-1018

Title: The Tule River Indian Housing Authority, Porterville, CA Did Not Administer the Procurement and Contracting of Its Recovery Act Native American Housing Block Grant in Accordance With HUD requirements

We audited the Tule River Indian Housing Authority in response to a complaint involving the Authority’s alleged misuse and improper procurement of $303,721 in Recovery and Reinvestment Act of 2009 Native American Housing Block Grant funding to be used for cabinet construction work on 38 of its housing units. Our overall objective was to determine whether the Authority followed procurement and contracting requirements and used its Recovery Act Native American Housing Block Grant funding in accordance with U.S. Department of Housing and Urban Development (HUD) requirements.

The Authority did not follow procurement and contracting requirements and did not use its Recovery Act Native American Housing Block Grant funding in accordance with HUD requirements under 24 CFR (Code of Federal Regulations) 85.36 (Procurement), 29 CFR Parts 3 and 5, and its own internal policies and procedures (see appendix C). The Authority also did not have sufficient policies, procedures, and controls in place to ensure that it complied with Federal procurement and contracting requirements, which led to improper cash disbursements and a lack of segregation of duties in its program. As a result, it used $36,884 for ineligible expenditures and failed to obligate $95,831 in Recovery Act Native American Housing Block Grant funds.

We recommend that HUD require the Authority to reimburse its Recovery Act Native American Housing Block Grant $36,884 from non-Federal funds for the ineligible overpayments made to the contractor for cabinet construction work. We also recommend that HUD recover the remaining unobligated Recovery Act grant funds of $95,831from the Authority for return to the U.S. Treasury. Further, we recommend that HUD require the Authority to establish and implement sufficient written procurement policies and procedures. In addition, we recommend that the Authority implement sufficient written internal control procedures for cash disbursements, including proper segregation of duties.

Issue Date: September 22, 2011
Audit Report No. 2011-PH-1015

Title: Camden County, NJ, Generally Administered Its Community Development Block Grant Recovery Act Funds According to Applicable Requirements

We audited Camden County, NJ's administration of its Community Development Block Grant funds that it received under the American Recovery and Reinvestment Act of 2009. We selected the County for an audit because we received two complaints alleging that the County misused Recovery Act funds and because of our mandate to audit Recovery Act activities. Our audit objective was to determine whether the County obligated, expended, and reported its Block Grant funds provided under the Recovery Act according to the Recovery Act and applicable HUD requirements.

We found that the County generally administered its Block Grant Recovery Act funds in accordance with the Recovery Act and applicable HUD requirements. However, it (1) approved a subrecipient to execute a change order for work which was outside the scope of the original contract, (2) could not demonstrate that the subrecipient performed a cost analysis for the change order work items, (3) did not ensure that a subrecipient fully complied with the Davis-Bacon Act, and (4) did not accurately report job creation information on the Federal reporting Web site. We found no evidence to substantiate the alleged misuse of Recovery Act funds.

We recommended that HUD require the County to (1) provide documentation to demonstrate that $37,610 expended for work performed under a change order was fair and reasonable or reimburse HUD from non-Federal funds for any amount it cannot support, (2) require a contractor to pay $1,041 to an employee to whom it paid less than the prevailing wage, and (3) report accurate job creation information for the reporting period ending September 30, 2011.

Issue Date: September 22, 2011
Audit Report No. 2011-NY-1016

Title: The City of Buffalo, NY, Did Not Always Disburse Homelessness Prevention and Rapid Re-Housing Program Funds in Accordance With Regulations

We completed and audit of the City of Buffalo, NY (City), pertaining to its administration of its Homelessness Prevention and Rapid Re-Housing Program (HPRP) funded under the American Recovery and Reinvestment Act of 2009. Our audit objectives were to determine whether the City efficiently and effectively administered its HPRP in compliance with Recovery Act and other applicable requirements. Specifically, whether City officials had adequate policies and procedures to ensure that (1) program funds drawn from HUD’s Line of Credit Control System were supported with adequate documentation, (2) subrecipients were properly procured, and (3) subrecipients were monitored to ensure compliance with all applicable requirements.

City officials did not always administer the HPRP grant in accordance with applicable rules and regulations. Specifically, City officials (1) made cash advances to a subrecipient that were not supported by the immediate cash requirements, (2) failed to provide adequate support for the selection of subrecipients, and (3) did not adequately monitor subrecipients. As a result, City officials could not assure HUD that they had effective control and accountability over all funds, and that those funds were used solely for authorized purposes.

We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct City officials to (1) provide documentation to support advances of $138,268, (2) provide documentation to justify the costs of two subrecipients with contracts totaling $392,141, and (3) revise its monitoring policies and procedures to ensure that it monitors the day-to-day activities of all subrecipients during the term of the grant agreements.

Issue Date: September 20, 2011
Audit Report No. 2011-NY-1015

Title: Weaknesses Existed in Essex County, NJ’s Administration of Its Homelessness Prevention and Rapid Re-Housing Program

We audited Essex County, NJ’s Homelessness Prevention and Rapid Re-Housing Program (HPRP) in support of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) goal to review the expenditure of American Recovery and Reinvestment Act funds and contribute to improving HUD’s execution and accountability of fiscal responsibilities. The audit objective was to determine whether Essex County officials obligated and expended HPRP funds within prescribed timeframes and implemented adequate controls to ensure that grant awards complied with HPRP program requirements.

Essex County officials ensured that HPRP funds were obligated and expended within prescribed timeframes; however, they had not established adequate controls to ensure that the County’s HPRP was administered in accordance with program requirements. We attribute these conditions to Essex County and subrecipient officials’ unfamiliarity with program requirements. Consequently, its subrecipient expended at least $43,833 contrary to program requirements, disbursed $141,260 on behalf of recipients whose eligibility was not adequately supported, and awarded grants that did not always comply with administrative requirements. As a result, Essex County officials cannot adequately assure HUD that HPRP funds were expended in accordance with HPRP requirements.

We recommend that the Director of HUD’s New Jersey Office of Community Planning and Development instruct Essex County officials to (1) reimburse the HPRP line of credit $43,833 for funds expended on ineligible HPRP costs, (2) provide documentation to adequately support the $141,260 in unsupported disbursements, and (3) strengthen subrecipient monitoring procedures before administrating future similar HUD-funded programs.

Issue Date: September 19, 2011
Audit Report No. 2011-AT-1017

Title: Broward County, FL, Did Not Accurately Report Recovery Act Grant Information for Its Community Development Block Grant Recovery Program

We audited Broward County’s Community Development Block Grant Recovery program funded under the American Recovery and Reinvestment Act of 2009. The audit objective was to determine whether the County administered its program in accordance with applicable U.S. Department of Housing and Urban Development and Recovery Act requirements. Specifically, the objective was to determine whether the County’s program (1) met the national objective(s), (2) had allowable expenditures, and (3) met reporting requirements.

The County demonstrated that it met the national objective and its expenditures were allowable. However, it did not accurately report program information on the Recovery Act Web site. This condition occurred because the County misinterpreted Federal regulations and did not have adequate controls to ensure proper reporting on the Recovery Act Web site. As a result, the public did not have access to accurate information on program funds.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the County to (1) recalculate the number of jobs created or retained and (2) revise misstatements on the Recovery Act Web site.

Issue Date: September 15, 2011
Audit Report No. 2011-FW-1015

Title: The Housing Authority of the City of Las Cruces, NM, Complied With Recovery Act Capital Fund Obligation and Expenditure Requirements but Had Environmental and Reporting Exceptions

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009, we audited the Housing Authority of the City of Las Cruces Public Housing Capital Fund Stimulus (formula) Recovery Act-funded activities. Specifically, our objectives were to determine whether the Authority (1) properly followed Recovery Act rules and regulations when obligating and expending its Recovery Act formula grant funds, (2) properly followed the environmental requirements for Recovery Act activities, and (3) accurately reported its Recovery Act activities.

The Authority properly obligated and expended its Recovery Act funds. It met the required deadlines and properly supported its obligations and expenditures. However, it did not properly follow environmental requirements before performing Recovery Act activities. Fortunately, the activities performed using Recovery Act funds were categorically excluded, meaning no further assessments were required. Further, the Authority did not accurately report on its Recovery Act funded activities. These exceptions occurred because the Authority did not understand the requirements. As a result, the proper environmental review of the Recovery Act activities was not performed, and the Authority's Federal reporting was incorrect and incomplete.

We recommend that the U. S. Department of Housing and Urban Development's (HUD) field office program center coordinator of the Office of Public Housing require the Authority and the City of Las Cruces to establish a process to ensure that future projects have the proper environmental review performed in a timely manner. We also recommend that HUD provide guidance to the Authority and assist it in correcting the information submitted to FederalReporting.gov.

Issue Date: September 14, 2011
Audit Report No. 2011-AT-1016

Title: The City of Hialeah, FL, Did Not Accurately Report the Number of Jobs Created or Retained on the Recovery Act Web Site for Its Homelessness Prevention and Rapid Re-Housing Program

HUD OIG audited the Homelessness Prevention and Rapid Re-Housing Program administered by the City of Hialeah, Florida (City). Our objective was to determine whether the City administered its Program in accordance with U.S. Department of Housing and Urban Development (HUD) and American Recovery and Reinvestment Act of 2009 requirements. Specifically, we wanted to determine whether (1) expenditures were allowable, (2) Program participants were eligible, and (3) Program reporting requirements were met.

The City demonstrated that the costs were allowable and Program participants were eligible. However, it did not accurately report the number of jobs created or retained for the quarter ending March 31, 2011, on the Recovery Act Web site. As a result, the public did not have access to transparent information on the number of jobs created or retained with Recovery Act funds.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the City to (1) calculate and maintain documentation to support the correct number of jobs created or retained for the quarter ending March 31, 2011, and (2) develop and implement procedures to ensure that the City adequately supports and calculates the number of jobs created or retained in future periods.

Issue Date: September 7, 2011
Audit Report No. 2011-BO-1010

Title: City of Brockton, MA, Did Not Implement an Adequate Cost Allocation Plan for Administrative Expenses and Paid Unreasonable Costs for Its Fiscal Year 2010 Community Development Block Grant Audit

We reviewed the administration expenses charged to the City of Brockton’s Community Development Block Grant in response to a complaint alleging that the City was charging the Community Development Block Grant program for City expenses. The objectives of our review were to determine whether the City (1) properly accounted for and reported its planning and administrative expenses for its Community Development Block Grant and (2) prepared accurate consolidated annual performance and evaluation reports that were adequately supported by operational results.

The City generally accounted for expenses and did not charge the Community Development Block Grant program for nonprogram expenses. However, the City’s subcontractors did not establish and implement an adequate cost allocation plan for salaries and administrative expenses, and one of its subcontractors paid unreasonable costs for its fiscal year 2010 audit. The City and its subcontractors prepared consolidated annual performance and evaluation reports that were supported by operational results.

For finding 1, we recommend that HUD require the City and its subcontractor, the Brockton Redevelopment Authority, to develop a formal policy to address the allocation of salaries and all other administrative costs, obtain HUD approval of its allocation plan, adapt its financial policies to provide for regular updates of the allocation plan and train key staff.

For finding 2, we recommend that HUD (1) ensure that the City and its administrator, Building a Better Brockton honor their commitment not to charge the $32,500 paid to the auditor for the 2010 annual financial statements to the Community Development Block Grant program and (2) require the City and the Brockton Redevelopment Authority to obtain a minimum of three price or rate quotations for the procurement of an independent public auditor for the subcontractor’s annual audit for the fiscal year ending June 30, 2011; perform a price comparison of all price or rate quotations obtained; and select the best applicant to conduct the annual audit of the fiscal year ending June 30, 2011.

Issue Date: August 26, 2011
Audit Report No. 2011-AO-0002

Title: The Lafayette Parish Housing Authority, LA, Generally Followed Requirements When Obligating and Expending Its Public Housing Capital Fund Stimulus Recovery Act funds But Did Not Always Comply With Recovery Act Procurement and Reporting

As a spinoff of a prior assignment and as part of our annual audit plan, the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Lafayette Parish Housing Authority’s (Authority) Public Housing Capital Fund Stimulus Recovery Act funded grant. Our objective was to determine whether the Authority followed HUD and American Recovery and Reinvestment Act of 2009 requirements. Specifically, we wanted to determine whether the Authority (1) properly obligated and expended its Recovery Act capital funds, (2) accurately reported its Recovery Act activities, and (3) followed Recovery Act requirements when procuring contracts for goods or services.

The Authority generally followed Recovery Act requirements when obligating and expending its Public Housing Capital Fund Stimulus Recovery Act funded grant. However, it did not always (1) enter its Recovery Act activities into the Recovery Act Management and Performance System (RAMPS), (2) report its Recovery Act activities by specified deadlines in neither RAMPS nor federalreporting.gov, or (3) enter accurate Recovery Act expenditure information into federalreporting.gov, as required. In addition, the Authority could not justify its reported estimates of jobs created or retained. These conditions occurred because the Authority did not have (1) adequate or experienced staff to perform the reporting function after its deputy director resigned or (2) adequate record-keeping practices. As a result, the Authority provided minimal transparency of and accountability for its Recovery Act activities.

The Authority generally procured its Recovery Act contract in accordance with Federal regulations. However, it did not (1) amend and label its written procurement policy for use with only Recovery Act grant procurements, as required, or (2) include HUD-required provisions in its Recovery Act-funded contract. These conditions occurred because the Authority ignored HUD’s recommendations to correct the procurement policy and did not have adequately trained staff. As a result, it was at risk, during the Recovery Act funding period, of exposure to disputes over contract selections. Further, by not having the proper contract provisions, the Authority may not have been able to enforce those regulatory provisions with its contractors.

We recommend that HUD’s Deputy Assistant Secretary for Field Operations require the Authority to (1) correct inaccurate Recovery Act expenditure amounts reported in federalreporting.gov for the second and fourth quarters of 2010 and (2) provide justification for its estimates of jobs created or retained in federalreporting.gov for the second, third, and fourth quarters of 2010 and the first quarter of 2011. Since the Authority had completed its Recovery Act program, we did not provide a recommendation regarding the procurement violation.

Issue Date: August 26, 2011
Audit Report No. 2011-AT-1015

Title: The City of Memphis, TN, Did Not Ensure Compliance With All Requirements for Its Homelessness Prevention and Rapid Re-Housing and Community Development Block Grant-Recovery Programs

HUD OIG audited the City of Memphis’ administration of its Homelessness Prevention and Rapid Re-Housing Program (HPRP) and Community Development Block Grant-Recovery (CDBG-R) funds received under the American Recovery and Reinvestment Act. We selected the City for audit because it received more than $3.3 million in HPRP funds and more than $2.1 million in CDBG-R funds, the most for any Tennessee city. The City had expended more than $1.5 million, or about 47 percent, of its HPRP funds, and $846,713, or about 39 percent, of its CDBG-R funds by March 14, 2011. Our objective was to determine whether the City’s Division of Housing and Community Development administered its HPRP and CDBG-R funds in compliance with the Recovery Act and other applicable requirements. Specifically, our objective was to determine whether the City ensured that (1) program participants were eligible, (2) program expenditures were supported with adequate documentation, (3) program reporting requirements were met, and (4) subgrantees were monitored and trained.

Although the City complied with most Recovery Act requirements, its program administration was deficient in some areas. The City (1) procured an architectural and engineering contract using the incorrect procurement methodology and without an adequate cost analysis, (2) paid a contractor for work performed without an executed contract, (3) delayed the execution of a greening and demolition contract to such an extent that the lowest bidder dropped out, (4) did not always comply with U.S. Department of Housing and Urban Development (HUD) guidance for implementing the “Buy American” provision of the Recovery Act, and (5) could not support the job figures reported in its most recent quarterly report for either the HPRP or CDBG-R grants. These conditions occurred because the City did not follow all of the requirements of the Recovery Act or its own policies and procedures. As a result, it incurred $619,114 in questioned costs related to its procurements and could not ensure compliance with all Recovery Act requirements.

We recommend that the Director of the Knoxville Office of Community Planning and Development require the City to (1) provide adequate support and justification for the procurement deficiencies and repay its program any portion of the $619,114 in questioned costs that it cannot support, (2) provide staff training on procurement requirements, and (3) provide HUD assurance that it has sufficient controls in place to ensure compliance with applicable procurement and Recovery Act requirements.

Issue Date: August 16, 2011
Audit Report No. 2011-CH-1013

Title: The Youngstown, OH, Metropolitan Housing Authority Needs To Improve Its Procurement Process

The U.S. Department of Housing and Urban Development’s Office of Inspector General audited the Youngstown Metropolitan Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus formula and competitive grants. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Authority for audit based on the U.S. Department of Housing and Urban Development’s monitoring review and a recent newspaper article. Our objective was to determine whether the Authority administered its grants in accordance with Recovery Act, HUD’s, and its requirements.

The Authority’s procurement process had weaknesses. Specifically, the Authority did not ensure that contracts were awarded to the contractor that provided the best overall value to the Authority. This condition occurred because the Authority did not properly evaluate the contractors’ proposals by not conducting a review of each evaluator’s reasoning behind his or her scoring of the contractors. As a result, the Authority used $97,705 in formula grant funds contrary to its annual contributions contract with HUD and its procurement requirements. As a result, HUD lacked assurance that the Authority effectively managed its grant.

We recommend that the Director of HUD’s Cleveland Office of Public Housing require the Authority to (1) reimburse $97,705 from non-Federal funds to HUD for transmission to the U. S. Treasury for the inappropriate use of grant funds and (2) implement adequate procedures to ensure that its procurement policy requirement that a contract shall be made to the lowest responsive and responsible bidder unless justified in writing based on price and other specific factors is followed.

Issue Date: August 16, 2011
Audit Report No. 2011-AO-1006

Title: The Mississippi Regional Housing Authority VIII, Gulfport, MS, Generally Followed Requirements When Obligating and Expending Its Recovery Act Capital Funds but Did Not Accurately Report Recovery Act Grant Information

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General initiated an audit of the Mississippi Regional Housing Authority VIII’s (Authority) Public Housing Capital Fund formula grant program as part of our annual audit plan to review American Recovery and Reinvestment Act of 2009 funds. Our objective was to determine whether the Authority properly obligated and expended its Recovery Act capital funds in accordance with requirements, followed Recovery Act requirements when procuring contracts for goods or services, and accurately reported its Recovery Act activities.

The Authority generally followed Recovery Act requirements in the obligation and expenditure of its Recovery Act capital funds. Additionally, it ensured that procurements were made in accordance with Federal and Recovery Act requirements. However, the Authority did not accurately report required Recovery Act Capital Fund grant information in federalreporting.gov.

For the seven quarterly reports reviewed during our audit period, the Authority overreported the amount of funds received in five quarters and underreported in one quarter. It also underreported the amount of funds expended in four quarters and overreported in one quarter. In addition, it failed to provide a list of projects and activities funded by name and incorrectly reported the primary place of performance in all seven quarters.

We recommend that the Jackson Office of Public Housing ensure that the Authority complies with HUD guidance and ensures the assignment of a staff person responsible for becoming familiar with the guidance on the Web site and reporting as required. We also recommend that the Jackson Office of Public Housing review the next quarterly report submitted to ensure that it is accurate due to the Authority’s history of inaccurate reporting.

Issue Date: August 11, 2011
Audit Report No. 2011-AT-1014

Title: Louisville-Jefferson County Metropolitan Government Generally Complied With Recovery Act Requirements for Its Homelessness Prevention and Rapid Re-Housing and Community Development Block Grant-Recovery Programs

We reviewed the Louisville-Jefferson County Metropolitan Government’s administration of its Homelessness Prevention and Rapid Re-Housing Program (HPRP) and Community Development Block Grant-Recovery (CDBG-R) program. We selected Louisville Metro for review because it received the largest grants in Kentucky with the exception of the State of Kentucky, and the U.S. Department of Housing and Urban Development (HUD) had not conducted monitoring of either grant. Our objective was to determine whether Louisville Metro administered its HPRP and CDBG-R grants in compliance with the requirements of the American Recovery and Reinvestment Act of 2009 and other applicable requirements. Specifically, our objectives were to determine whether Louisville Metro had adequate policies and procedures in place to ensure that (1) the program participants were eligible, (2) the program expenditures were supported with adequate documentation, (3) the program reporting requirements were met, and (4) the subgrantees were monitored and trained.

Louisville Metro generally complied with Recovery Act requirements for its HPRP and CDBG-R grants. The report contains no recommendations.

Issue Date: August 10, 2011
Audit Report No.: 2011-PH-1014

Title: The Allegheny County Housing Authority, Pittsburgh, PA, Did Not Always Procure Goods and Services or Obligate Funds According to Recovery Act and Applicable HUD Requirements

We audited the Allegheny County Housing Authority’s administration of its Public Housing Capital Fund grants that it received under the American Recovery and Reinvestment Act of 2009. We selected the Authority for audit because it received a $7.7 million formula grant and three competitive grants totaling $5.8 million, which was the third largest formula grant and the second largest amount of capital fund competitive grants awarded in Pennsylvania. Our objective was to determine whether the Authority properly procured goods and services and obligated its Recovery Act capital funds according to Recovery Act and applicable U.S. Department of Housing and Urban Development (HUD) requirements. We found the Authority did not always procure goods and services and obligate its Recovery Act capital funds properly. It did not have a written contract to support $1.3 million that it paid to a contractor. It did not always comply with the “buy American” requirement of the Recovery Act, improperly obligated grant funds, erroneously drew grant funds from HUD, did not amend its procurement policy for competitive grants as required, and allowed an apparent conflict of interest to occur. We recommended that HUD require the Authority to provide documentation to support expenditures totaling $1.8 million identified in this report or reimburse HUD from non-Federal funds for any amount that it cannot support. We also recommended that HUD require the Authority to (1) reimburse $102,000 from non-Federal funds for ineligible expenditures, (2) develop and implement controls to demonstrate that funds it obligated for inspection services were related to Recovery Act-funded work items, (3) stop erroneously drawing grant funds, and (4) ensure that it complies with applicable conflict-of-interest requirements and seek exceptions on a case-by-case basis if applicable.

Issue Date: July 28, 2011
Audit Report No.: 2011-DP-0008

Title: The Disaster Recovery Grant Reporting System that Maintained Recovery Act Information Had Application Security Control Deficiencies

We audited the Disaster Recovery Grants Reporting (DRGR) system to determine whether adequate controls were in place to safeguard and accurately track and report $1.93 billion in American Recovery and Reinvestment Act of 2009 (Recover Act) funds allocated to the Office of Community Planning and Development’s (CPD) Neighborhood Stabilization Program 2. We found that the improvements that CPD made to the DRGR system within the last year were beneficial to the overall assurance that the system’s data were properly maintained, safeguarded, and in compliance with Federal regulations. However, in order for HUD to address Recovery Act requirements for accurate data requirements, additional improvements should be made to the DRGR system. We recommend that CPD modify the DRGR system to improve its application controls. Also, the DRGR system owner needs to coordinate with the Office of the Chief Information Officer to ensure that the 1) security documentation is updated, 2) contingency plan is adequately tested, and 3) DRGR system is included in the annual disaster recovery test as it is a mission-critical application. OIG has determined that the computer security related contents of this report would not be appropriate for public disclosure and is releasing this redacted version to the public.

Issue Date: July 25, 2011
Audit Report No.: 2011-CH-1010

Title: The Rockford Housing Authority, Rockford, IL, Needs to Improve Its American Recovery and Reinvestment Act Contract Administration Procedures

We audited the Rockford Housing Authority’s (Authority) American Recovery and Reinvestment Act of 2009 (Recovery Act) Public Housing Capital Fund Stimulus Formula and Competitive grants. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Authority based on a citizen complaint. Our objective was to determine whether the Authority administered its grants in accordance with Recovery Act and U.S. Department of Housing and Urban Development (HUD) requirements and its administrative plan.

The Authority did not administer its Capital Fund grants in accordance with Recovery Act and HUD’s requirements and its administrative plan. Specifically, it did not ensure that (1) its contractors complied with “buy American” and Section 3 requirements (see Appendix C) and (2) construction work was complete before payments were issued. This condition occurred because the Authority lacked adequate procedures and controls to ensure compliance with Federal requirements and its administrative plan. As a result, it was unaware that one of its contractors purchased nearly $18,000 in materials manufactured outside the United States, and HUD and the Authority lacked assurance that the contractors followed HUD’s Section 3 requirements and work was complete before payments were issued. However, based on our review, the Authority correctly reported its Recovery Act progress and disbursed its grant funds in a timely manner in accordance with HUD’s requirements.

The complainant’s allegations regarding fraud, waste, abuse, and serious mismanagement regarding Recovery Act funds were not substantiated by the results of this audit.

We recommend that the Director of HUD’s Chicago Office of Public Housing require the Authority to (1) provide documentation to ensure that Capital Fund grants were not used to reimburse the nearly $18,000 in materials purchased contrary to the Buy American Act, (2) review the products purchased by its remaining contractors to ensure that they were manufactured in the United States, and (3) implement adequate procedures and controls to ensure that Recovery Act activities meet “buy American” and Section 3 requirements and that construction work is complete before payments are made.

Issue Date: July 22, 2011
Audit Report No.: 2011-LA-1015

Title: Chicanos Por La Causa, Inc., Did Not Always Administer its Neighborhood Stabilization Program 2 Grant as Required

We audited Chicanos Por La Causa, Inc.’s (grantee) Neighborhood Stabilization Program 2 (NSP2) grant to determine whether the grantee administered its NSP2 grant in accordance with HUD’s program requirements. We conducted the audit as part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) fiscal year 2011 annual audit plan and to support HUD OIG’s fiscal year 2011 strategic goal to contribute to the oversight objectives of the American Recovery and Reinvestment Act of 2009.

We found the grantee did not always administer its NSP2 grant in accordance with HUD’s program requirements. Specifically, the grantee expended NSP2 funds for improper procurements, ineligible and unsupported expenditures, and inadequately secured program income. Generally, these issues occurred because the grantee and its consortium members incorrectly applied Federal requirements in certain instances. Nevertheless, our review did not attribute these findings to significant internal control deficiencies. As a result of the improper expenditures, $754,000 in NSP2 funds was potentially unavailable for eligible activities.

We recommend that the HUD Deputy Assistant Secretary for Grant Programs require the grantee to (1) provide HUD with supporting documents for the $366,000 in NSP2 funds paid to improperly procured contractors or reimburse the unsupported costs to its NSP2 account from non-Federal funds; (2) reimburse its NSP2 account from non-Federal funds $209,947 for ineligible and unsupported expenditures; and (3) discontinue future payments on the developers’ fees to subrecipients totaling $178,451. Additionally we recommend that the HUD Assistant Secretary for Grant Programs require the grantee to update its NSP2 policies and procedures to include obtaining and reviewing all consortium member contracts.

Issue Date: July 22, 2011
Audit Report No.: 2011-DP-0007

Title: Review of the National Environmental Policy Act and Core Activity Modules Within the Recovery Act Management and Performance System

We audited the U.S. Department of Housing and Urban Development’s (HUD) management procedures, practices, and controls related to the Recovery Act Management and Reporting System (RAMPS). Our objective was to assess its capability to record and provide data required by the American Recovery and Reinvestment Act of 2009 on which HUD is required to report.

Overall, RAMPS had the capability to record Recovery Act data and produce the reports necessary for HUD to comply with the Recovery Act reporting requirements. However, we identified areas in which vulnerabilities existed. These vulnerabilities could compromise the validity of the information that is required to be disclosed to the public.

We recommend that the Office of the Chief Information Officer ensure that (1) reports required by the Recovery Act are accurate and complete, (2) access controls over RAMPS adequately protect Recovery Act data that are required to be disclosed to the public, and (3) the RAMPS technical problem reporting process is limited to a single point of contact.

Issue Date: July 21, 2011
Audit Report No.: 2011-AT-1013

Title: The Greensboro Housing Authority Needs To Improve Internal Controls for Administering Recovery Act Funds

We audited the Greensboro Housing Authority (Authority) as part of our annual plan to review public housing capital funds awarded under the American Recovery and Reinvestment Act of 2009 (Recovery Act). The Authority received a $5.6 million Public Housing Capital Fund Stimulus (formula) Recovery Act Funded grant, the second highest in the State. It also received a Recovery Act funded $1.05 million capital fund competitive grant for addressing the needs of the elderly and persons with disabilities. Our overall objective was to determine whether the Authority obligated and disbursed capital funds received under the Recovery Act in accordance with applicable U.S. Department of Housing and Urban Development (HUD) rules and regulations. Our specific objectives were to determine whether the Authority (1) properly obligated funds, (2) complied with applicable procurement requirements, (3) properly drew down and expended funds for eligible activities, and (4) properly reported its Recovery Act activities.

Although the Authority used its Recovery Act funds for eligible activities and complied with most program requirements, it had several deficiencies with regard to obligations, procurement, expenditures, and reporting. These deficiencies occurred due to staff errors and insufficient internal controls for some functions. As a result, the Authority could not support the eligibility of $741,848 in obligations, contracts, and expenditures, and its reporting for Recovery Act activities contained errors.

We recommend that the Director of the Greensboro Office of Public Housing require the Authority to develop, implement, and enforce written procedures for its procurement, Recovery Act reporting, and obligations. The Authority must also provide support showing that $459,499 in contracts was awarded in accordance with procurement regulations and that $66,730 in obligations and $215,619 in expenditures met HUD’s requirements.

Issue Date: July 21, 2011
Audit Report No.: 2011-LA-1014

Title: The Housing Authority of the County of Monterey, Salinas, CA, Did Not Administer the Procurement and Contracting of Its Capital Fund Recovery Grant Funds in Accordance With HUD Laws and Regulations

We completed an audit of the Housing Authority of the County of Monterey’s (Authority) administration of more than $2.9 million in Capital Fund Recovery Grant funding as part of the American Recovery and Reinvestment Act of 2009. Our objective was to determine whether the Authority administered the procurement and contracting of its grant funds in accordance with HUD laws and regulations. The Authority did not administer the procurement and contracting of $99,900 in grant funds in accordance with HUD laws and regulations. It did not follow HUD's or its own procurement policies and procedures when it procured grant-funded construction contracts. The Authority also included required geographic preference clauses in its grant-funded construction contracts. These clauses restricted the procurement process in a manner that was not fair and open to competition.

We recommend that the Director of HUD's San Francisco Office of Public Housing require the Authority to

Provide to HUD documentation of at least three written price quotations to HUD showing justification of the $99,900 in unsupported costs incurred for the electrical wiring upgrades at 15 housing units. This documentation should include a tabulation of quotations received, certified, and retained by the Authority. Otherwise, repay HUD $99,900 from nonfederal funds for the unsupported payments incurred.
Conduct all future procurements in compliance with HUD laws and regulations to ensure fair and open competition. If the Authority does so, it would avoid instances such as the roofing and solar panel installation contracts identified in this report that were conducted with limited competition.
Establish a record-keeping system that ensures complete, consistent, and accurate documentation of all future procurements to ensure compliance with HUD laws and regulations.
Provide appropriate training to responsible personnel to ensure better understanding HUD procurement laws and regulations.

Date Issued: July 20, 2011
Audit Report No.: 2011-SE-1007

Title: King County Housing Authority, Tukwila, WA, Generally Complied With Recovery Act Capital Fund Competition Grant Requirements

The U.S. Department of Housing and Urban Development, Office of Inspector General audited King County Housing Authority to determine whether its expenditures for three Recovery Act Capital Fund Competition Grants were appropriate, eligible, and adequately supported and whether related procurements were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and Recovery Act requirements. We selected the Authority because it received more than $16 million in Recovery Act Capital Fund competitive grant funds. The Authority generally ensured that its Recovery Act Capital Fund Competition Grant expenditures for the three grants were appropriate, eligible, and adequately supported and that materials and services were properly procured. This report contains no recommendations, and no further action is necessary.

Issue Date: July 15, 2011
Audit Report No.: 2011-LA-0003

Title: Office of Public Housing, San Francisco, CA, Monitored Recovery Act Grants Awarded to Region IX Public Housing Authority Grantees in Accordance With Applicable Requirements

We audited the monitoring practices that the San Francisco Office of Public Housing (SF OPH) used to monitor American Recovery and Reinvestment Act of 2009 supplemental capital formula and competitive grants awarded to public housing agencies in Region IX. The audit was conducted in accordance with a mandate to review the U.S. Department of Housing and Urban Development’s (HUD) monitoring of Recovery Act funds to determine whether there were safeguards to ensure that grantees used funds for their intended purposes. Our objective was to determine whether SF OPH (1) used HUD’s risk assessment process to select Recovery Act grantees for monitoring, (2) monitored grantees’ administration of the grant for compliance with Recovery Act requirements, and (3) monitored grantees to ensure timely obligation and expenditure of Recovery Act funding. We determined SF OPH in Region IX complied with HUD policies for monitoring Recovery Act grantees selected through the risk assessment process. It also monitored grantees’ administration of the grant for compliance with Recovery Act requirements and provided increased transparency and adequate monitoring of Recovery Act expenditures.

Issue Date: July 14, 2011
Audit Memorandum No.: 2011-NY-1802

Title: The City of Dunkirk, NY, Used Community Development Block Grant Recovery Act Funding for an Ineligible Activity

We conducted a review of the City of Dunkirk, NY (City), pertaining to its Community Development Block Grant (CDBG) funds received under the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected this auditee based on a congressional interest inquiry received by the Recovery Act Transparency and Accountability Board and forwarded to the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General (OIG) in September 2010. The inquiry pertained to a concern that CDBG funds received under the Recovery Act (CDBG-R) may have been used to support an activity prohibited by Section 1604 of the Recovery Act. The primary objective of our review was to evaluate the validity of the congressional concern that the City used CDBG-R funds for an activity prohibited by the Recovery Act.

The City’s water park Recovery Act project was an activity prohibited under Section 1604 of the Recovery Act. Federal funding expended to date of $134,654 was, therefore, ineligible for inclusion under CDBG-R. Accordingly, the remaining $18,866 of the total $153,520 in CDBG-R grant funding to the City should be reprogrammed to another eligible activity. The ineligible costs occurred because City officials were either not aware of or misinterpreted the restrictions on the use of CDBG-R funds and did not have adequate controls to ensure that CDBG-R costs incurred were for eligible activities and supported by adequate documentation.

We recommend that the Director of HUD’s Buffalo Community Planning and Development Division instruct City officials to reimburse the CDBG-R program line of credit the $134,654 expended on ineligible Recovery Act costs from non-Federal funds, reprogram the remaining $18,866 in CDBG-R funding to other eligible activities and do not allow City officials to use Recovery Act funds to support the water park project, submit a plan to use the $153,520 in funds for a project that is eligible under the Recovery Act and provide guidance on the allowable activities for CDBG-R funds and direct City officials to establish controls to ensure that all CDBG-R costs are only incurred for eligible activities that are supported by appropriate documentation.

Issue Date: July 14, 2011
Audit Report No.: 2011-LA-1013

Title: The Housing Authority of the County of Los Angeles, Monterey Park, CA, Generally Administered the Procurement and Contracting of Its Recovery Act Capital Fund Formula Grant in Accordance With HUD Requirements

We audited the Housing Authority of the County of Los Angeles’ American Recovery and Reinvestment Act Capital Fund formula grant. We performed the audit because Recovery Act reviews are part of the Office of the Inspector General’s (OIG) annual plan and because the Authority was the fourth highest overall recipient of Recovery Act capital funds in California. Our audit objective was to determine whether the Authority administered the procurement and contracting of its Recovery Act Capital Fund formula grant in accordance with U.S. Department of Housing and Urban Development (HUD) rules and regulations.

We found that the Authority generally administered the procurement and contracting of its Recovery Act Capital Fund formula grant in accordance with HUD rules and regulations. As a result, there are no recommendations.

Issue Date: July 8, 2011
Audit Report No.: 2011-AT-1012

Title: The Office of the Commissioner for Municipal Affairs, San Juan, PR, Did Not Always Ensure Compliance With Block Grant Recovery Act Program Requirements

We audited the Office of the Commissioner for Municipal Affairs’ (OCAM) State Community Development Block Grant (Block Grant) funds that it received under the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected OCAM for review as part of our strategic plan, based on the amount of Block Grant Recovery Act funds allocated. The objectives of this audit were to determine whether OCAM (1) disbursed Block Grant Recovery Act funds in accordance with applicable requirements and for eligible purposes and (2) reported to HUD accurate and supported information on program accomplishments.

OCAM did not always charge the Block Grant Recovery Act program for supported disbursements or ensure that its funds were used in a timely manner in accordance with HUD regulations. In addition, it did not always report accurate and supported information on program accomplishments. HUD lacked assurance that more than $135,000 in Block Grant Recovery Act program expenditures was allowable and allocable, and more than $42,000 in drawdowns remained unexpended. In addition, OCAM reported inaccurate information to HUD when it overstated program expenditures by at least $450,000 and lacked support for the number of jobs created or retained. As a result, HUD lacked assurance that the expenditures were reasonable, allocable, and used for authorized purposes in a timely manner and that reported program accomplishments were accurate and complete.

We recommend that HUD require OCAM to submit documentation to adequately support the allowability and allocability of $135,445 charged to the Block Grant Recovery Act program associated with administrative costs expenditures. HUD should also require OCAM to ensure that $42,829 associated with unexpended drawdowns is used for the approved activity or reprogrammed for other eligible purposes.

HUD should also require OCAM to review all Block Grant Recovery Act spending and job information in the Federal reporting Web site and correct any inaccurate information. We further recommend that HUD require OCAM to establish adequate internal controls and procedures to ensure that all Block Grant Recovery Act expenditures are supported, disbursed in a timely manner, properly accounted for, and reconciled with HUD’s information system and that they comply with HUD requirements. In addition, HUD should require OCAM to establish and implement internal control measures to ensure that accurate and supported Block Grant Recovery Act data are reported.

Issue Date: July 7, 2011
Audit Report No.: 2011-FW-1014

Title: The Housing Authority of the City of Wichita Falls, TX, Generally Ensured That Its Recovery Act Capital Fund Grant Complied With Requirements

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 Wichita Falls’ Public Housing Capital Fund Stimulus (formula) Recovery Act-funded activities. Specifically, our objectives were to determine whether the Authority followed Recovery Act rules and regulations when obligating and expending its Recovery Act capital funds and reported Recovery Act funds as required.

Generally the Authority followed Recovery Act rules and regulations with two minor exceptions. It properly used the formula grant funds to expand its extensive capital projects already underway. It met the time deadlines and provided support for both obligations and expenditures associated with the formula grant. It also reported its use of the funds in a timely manner. However, the Authority relied on its architect’s statement that only one asbestos monitor could provide needed services, resulting in a $16,600 contract being awarded without adequate competition. In addition, it did not ensure that water heaters, which cost $16,799, met Federal Energy Management Program requirements before purchase. These minor exceptions occurred because the Authority did not follow or was not aware of the Federal requirements.

We recommend that the Director of the U.S. Department of Housing and Urban Development’s (HUD) Office of Public Housing require the Authority to provide support for the $16,600 spent for asbestos monitoring and the $16,799 spent for noncompliant water heater purchases. If the Authority cannot support the costs, HUD should return the unsupported cost to the U.S. Treasury.

Issue Date: July 6, 2011
Audit Report No.: 2011-LA-1012

Title: The City of Las Vegas, NV, Did Not Always Ensure That Homelessness Prevention and Rapid Re-Housing Funds Were Used as Required

We audited the City of Las Vegas Homelessness Prevention and Rapid Re-Housing Program (HPRP) established by the American Reinvestment and Recovery Act of 2009 (Recovery Act). Our review of the City of Las Vegas (City) was in response to the Recovery Act, which mandates that OIG take the responsibility to oversee and audit programs and activities funded by the Recovery Act. The City received a grant of $2.1 million.

Our objective was to determine whether the City administered and expended its grant in accordance with program requirements. The City paid for HPRP services for ineligible participants and participants whose eligibility was unsupported. It also paid for ineligible activities. We reviewed 18 case files and found that 8 participants were ineligible and 7 did not have adequate documentation to support eligibility. As a result, we are questioning $75,273 out of the $85,691 in direct assistance to participants that we reviewed. We also found that the City did not have adequate procedures to ensure that HPRP expenditures and activities were accurately tracked and recorded.

We recommend that the Acting Director of the San Francisco Office of Community Planning and Development require the City to (1) reimburse the program $45,825 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 $29,448 for participants reviewed who lacked adequate documentation and determine and reimburse any unsupported amounts that have been spent since our review for these participants; (3) design and implement adequate procedures for determining, reviewing, and approving eligibility for participants and activities that will provide reasonable assurance that assistance payments are made only for eligible participants and activities; (4) develop and implement new controls and procedures to ensure that financial records are accurate and prevent the deficiencies identified during the audit; and (5) perform a complete review of assistance payments to date and correct any errors. We also recommend that HUD review additional case files and identify additional questioned costs

Issue Date: June 30, 2011
Audit Report No.: 2011-PH-1012

Title: City of Reading, PA, Generally Complied With Neighborhood Stabilization Program 2 Recovery Act Requirements

We audited the City of Reading, PA’s Neighborhood Stabilization Program 2 as part of our annual audit plan to review activities funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act) because the City received $5 million in Program funds under the Recovery Act. Our audit objective was to determine whether the City (1) met Program expenditure deadlines, (2) made Program expenditures that were eligible and adequately supported, (3) properly awarded contracts, (4) met appraisal requirements, and (5) adequately monitored its Program. We found that the City met Program expenditure deadlines, and generally ensured expenditures were eligible and adequately supported and that contracts were properly awarded. Some improvements were needed, however, to ensure that some costs were adequately supported and to ensure that the City fully met property appraisal requirements and adequately monitored its Program. We recommended that HUD require the City to (1) provide documentation showing that $58,263 paid to four contractors without written contracts or detailed invoices was fair and reasonable or reimburse its Program from non-Federal funds, (2) provide documentation showing it reimbursed its Program $8,151 from non-Federal funds for ineligible vehicle expenses, (3) ensure all future contracts are in writing and adequately documented, (4) ensure all required clauses are included in future solicitations and contracts, (5) ensure it fully meets Program appraisal requirements, and (6) adequately document its Program monitoring and establish an internal audit function as required.

Issue Date: June 30, 2011
Audit Report No.: 2011-FW-1013

Title: The City of Beaumont, TX, Should Strengthen Its Controls Over Its Homelessness Prevention and Rapid Re-Housing Program

We reviewed the City of Beaumont’s (City) Homelessness Prevention and Rapid Re-Housing Program (Program). Our objective was to determine whether the City ensured that its Program complied with Recovery Act and U. S. Department of Housing and Urban Development (HUD) program expenditure and reporting requirements.

The City should strengthen its controls over its Program to better comply with Recovery Act requirements. Specifically, it should improve controls over the timely obligation of funds, eligibility of participants, and monitoring of subrecipients. This lack of timely obligation of funds may cost the City’s program approximately $215,000. These conditions occurred because the City did not develop policies and procedures specifically for its Program to provide appropriate guidance to the subrecipients.

We recommended that the Director, Houston, TX Office of Community Planning and Development, require the City to provide support or repay approximately $215,000 of funds and implement necessary controls to better manage its Program and demonstrate more effectively its compliance with requirements. Also, we recommend that if the City cannot support the obligation of funds that HUD recapture and rescind the $214,753 in deobligated funds and deposit those funds with the U. S. Treasury in accordance with the Recovery Act, as amended.

Issue Date: June 24, 2011
Audit Report No. 2011-PH-1011

Title: The Wilmington, DE, Housing Authority Generally Administered Its Public Housing Capital Fund Recovery Act-Funded Formula and Competitive Grants in Accordance With Applicable Requirements

We audited the Wilmington Housing Authority's administration of its Public Housing Capital Fund Recovery Act-Funded Formula and Competitive Grants that it received under the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected the Authority for audit because it received a $5.2 million Public Housing Capital Fund Formula (Recovery Act-Funded) grant and two Public Housing Capital Fund Competitive (Recovery Act-Funded) grants totaling $13.6 million, which was the largest formula grant and the largest amount of capital fund competitive grants awarded in the State of Delaware. Our audit objective was to determine whether the Authority administered capital funds provided under the Recovery Act according to the requirements of the Recovery Act and applicable U.S. Department of Housing and Urban Development (HUD) rules and regulations. We found that the Authority generally administered its capital fund grants according to the requirements of the Recovery Act and applicable HUD rules and regulations. The report did not contain any findings.

Issue Date: June 23, 2011
Audit Report No.: 2011-KC-0002

Title: HUD’s Region VII Office of Community Planning and Development Complied With HUD’s Monitoring Requirements for Recovery Act Recipients

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited HUD’s Region VII Office of Community Planning and Development (CPD) to determine whether it complied with HUD’s monitoring requirements for Recovery Act recipients. The Region VII CPD office complied with HUD’s monitoring requirements for Recovery Act recipients. It appropriately established and implemented a risk assessment process to target Recovery Act grantees for review, and appropriately monitored grantees. This report contains no formal recommendations, and no further action is necessary.

Issue Date: June 17, 2011
Audit Report No.: 2011-CH-1009

Title: The Housing Authority of the City of South Bend, IN, Generally Administered Its Public Housing Capital Fund Stimulus Formula Grant (Recovery Act Funded) in Accordance With Applicable Requirements

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the Housing Authority of the City of South Bend, IN’s (Authority) American Recovery and Reinvestment Act of 2009 (Recovery Act) Public Housing Capital Fund Stimulus Formula grant. Our objective was to determine whether the Authority obligated, disbursed, and expended funds in accordance with Recovery Act and U.S. Department of Housing and Urban Development (HUD) requirements.

The Authority generally obligated, disbursed, and expended funds in accordance with Recovery Act and applicable HUD requirements. Additionally, it maintained adequate documentation to support its disbursements, generally complied with HUD’s and its own procurement requirements, and accurately reported its obligations and expenditures. Since the report does not contain findings, there are no recommendations.

Date Issued: June 16, 2011
Audit Report No.: 2011-DE-1003

Title: The Housing Authority of the City and County of Denver, CO, Generally Followed Requirements When Obligating and Expending its Recovery Act Capital Funds But Did Not Accurately Report Recovery Act Grant Information

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, reviewed the Housing Authority of the City and County of Denver, CO (Authority), because it had the largest number of low-rent and Section 8 units and received the largest amount of American Recovery and Reinvestment Act of 2009 (Recovery Act) capital funds of all of the housing authorities in HUD's Region VIII (Colorado, Utah, Wyoming, Montana, North Dakota, South Dakota). The objectives of our review were to determine whether the Authority obligated and expended its formula 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 in the obligation and expenditure of its formula Recovery Act capital funds. However, it did not accurately report required Recovery Act capital fund grant information in federalreporting.gov.

We recommend that the Denver Office of Public Housing assist the Authority in receiving formal training on how to properly report Recovery Act information in federalreporting.gov.

Issue Date: June 16, 2011
Audit Report No.: 2011-FW-1012

Title: The City of Tulsa, OK, 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) and based on the U. S. Department of Housing and Urban Development’s (HUD) concerns about the capacity of the City of Tulsa’s (City) subrecipient, we audited the City’s Community Development Block Grant Recovery (CDBG-R) program. Our objective was to determine whether the City complied with HUD’s CDBG-R obligation, procurement, expenditure, and reporting requirements.

The City poorly managed its Recovery Act activities by selecting a subrecipient that did not have the capacity to complete the project within the required time limit. Further, the City did not adequately monitor the subrecipient, did not comply with Federal requirements, and did not apply good financial controls. This condition occurred because the City did not ensure that a subrecipient had the capacity to complete an activity and lacked the required policies and procedures. As a result, it committed more than $3 million in Federal funds for a project that it might not complete. Further, the City disregarded procurement requirements, did not have policies or procedures regarding the disposal of hazardous waste, and did not implement sound controls over the grant. As a result, it could not comply with regulations or ensure that its contractors followed requirements.

We recommended that the Acting Director, Community Planning and Development Division, Oklahoma City, OK, require the City to select a subrecipient that has the capacity, both financially and administratively, to complete and operate the Shoppes on Peoria and to provide documentation by November 30, 2011. If the City cannot obtain a subrecipient that can complete the project, it should select another project that it can complete by September 30, 2012. Further, the City should support or repay more than $49,000 that it spent without a contract and improve its controls for its grants. Also, HUD should seek administrative sanctions against the subrecipient and its related entities to protect HUD and the City from future instances of noncompliance.

Issue Date: June 14, 2011
Audit Memorandum No.: 2011-BO-0801

Title: HUD’s Controls over Energy Audits and Using Recovery Act Funds for Energy Equipment Did Not Warrant Further Audit Testing

We reviewed the U.S. Department of Housing and Development’s (HUD) process for ensuring that grantee public housing agencies (PHA) receiving American Recovery and Reinvestment Act of 2009 (Recovery Act) Capital Funds complied with Section 152 of the 2005 Energy Act. We reviewed this process because during a recent Recovery Act audit we identified some non-Energy Star compliance and premature replacement purchases and during 2008 grantees paid $1.6 billion for utilities, representing 24 percent of their operating costs. Our objectives were to evaluate HUD’s management controls to ensure that grantees (1) conducted energy audits and implemented cost-saving measures, (2) purchased equipment that met Federal efficiency standards, and (3) only replaced equipment that was obsolete or near the end of its expected useful life.

HUD’s controls over energy audits could be improved to ensure that grantees conduct energy audits and implement cost-saving measures. However, HUD indicated that the controls should be improved in fiscal year 2012 when new regulations are issued, and HUD included new energy audit procedures and directed grantees to complete energy audits at least every 5 years as part of its physical needs assessment process. Also, the review showed that grantee PHAs generally purchased equipment that met Federal efficiency standards, and 14 of 15 grantee PHAs evaluated completed energy system modernization in accordance with their annual and/or 5-year plan.

Issue Date: June 13, 2011
Audit Report No.: 2011-SE-1006

Title: Mid-Willamette Valley Community Action Agency Did Not Always Follow Recovery Act Homelessness Prevention and Rapid Re-Housing Program Requirements

The US Department of Housing and Urban Development (HUD) Office of Inspector General audited the Mid-Willamette Community Action Agency’s (Agency) Homelessness Prevention and Rapid Re-Housing Program (HPRP). Our objective was to determine whether the Agency disbursed HPRP funds and reported data in accordance with Recovery Act requirements. We found that the Agency paid for HPRP services without adequate supporting documentation for participant eligibility and expenses and did not always enter participant data accurately into the HPRP reporting system. We recommend that HUD require the Agency to provide supporting documentation for participant eligibility and expenditures or reimburse its program accounts $64,608, and to develop and implement a quality control plan to ensure that it verifies and documents the eligibility of HPRP participants and expenditures. In addition, we recommend that the Agency correct discrepancies in the HPRP reporting system and implement procedures to ensure that case managers enter accurate participant data.

Issue Date: June 10, 2011
Audit Report No.: 2011-BO-1008

Title: The Housing Authority of the City of New Haven, CT, Could Not Show That It Always Complied With Environmental and Labor Standards Enforcement Requirements

We audited the Housing Authority of the City of New Haven’s (Authority) Public Housing Capital Fund (Capital Fund) and American Reinvestment and Recovery Act of 2009 Capital Fund (Recovery Act Capital Fund) projects for compliance with environmental and labor law requirements. We initiated this assignment because a previous Office of Inspector General (OIG) audit of the Authority’s Recovery Act Capital Fund activities identified a significant risk of noncompliance with environmental and labor law requirements that could impact all of the Authority’s Capital Fund projects. Our objectives were to determine whether the Authority (1) funded Capital Fund projects for eligible activities in accordance with U.S. Department of Housing and Urban Development (HUD) requirements, (2) complied with environmental requirements for proper removal and disposal of asbestos waste for its Capital Fund and Recovery Act Capital Fund projects, and (3) complied with labor standards enforcement requirements.

The Authority funded Capital Fund projects for eligible activities in accordance with HUD requirements. However, it did not always comply with environmental law requirements. Specifically, the Authority did not ensure that its abatement contractors complied with contract requirements for the proper disposal of asbestos waste removed from its Federal housing projects in accordance with its contracts. We reviewed nine abatement contracts with the Authority and found that seven of the contractors could not support proper disposal of asbestos waste removed from the projects in accordance with contract requirements. This condition occurred because the Authority relied on its environmental monitoring contractor to ensure compliance with environmental requirements with no apparent follow-up or oversight of its contractor. As a result, the Authority could not support disposal costs associated with more than $2 million in abatement costs paid on these contracts.

The Authority also did not always comply with labor standards enforcement requirements. Specifically, it did not

Complete the required enforcement reports for at least seven contractors, in which at least six violations appeared to have been willful noncompliance;
Ensure that all required information reported to HUD in its semiannual enforcement reports was complete and accurate;
Always document that it performed a review of certified payrolls and followed up on payroll falsification indicators;
Require contractors to sign a statement of future compliance when underpayment violations were identified;
Establish an account to hold restitution collected for workers owed restitution but who were not found or for appeals by the contractor; or
Ensure that its enforcement file system was complete.

This condition occurred in part because the Authority did not have written policies and procedures for labor standards compliance. Additionally, the Authority’s contract with a city agency (agency) responsible for identifying noncompliance of labor standards violations was too general and did not detail the Authority’s and agency’s responsibilities in the area of labor standards administration and enforcement. Lastly, the Authority did not adequately track noncompliance violations of its contractors and resolutions, including restitution amounts determined and collected. As a result, HUD did not have assurance that the Authority met its labor standards enforcement requirements. Additionally, there is a risk that the Authority may continue to use contractors that willfully violate labor standards requirements and continue to hire undocumented workers to work on federally funded projects, including Recovery Act-funded projects. Further, if the Authority does not provide complete and accurate enforcement reports to HUD, HUD cannot comply with its requirements to provide this information to the U.S. Department of Labor as required.

We recommend that the Program Center Coordinator of HUD’s Hartford Office of Public Housing ensure the Authority’s written policies and procedures comply with requirements for ensuring that hazardous waste is properly disposed of and accounted for. We also recommend that the Program Center Coordinator of HUD’s Hartford Office of Public Housing require the Authority to (1) ensure that its staff is trained in environmental monitoring requirements, (2) adequately monitor its environmental monitoring contractors to ensure that they meet the requirements of their contracts, and (3) support that asbestos waste removed from Federal projects was properly accounted for and disposed of or repay from non-Federal funds the disposal costs it cannot support from the more than $2 million in abatement costs for the projects reviewed.

We also recommend that the Program Center Coordinator of HUD’s Hartford Office of Public Housing ensure that (1) the Authority’s written policies and procedures comply with requirements and include reporting responsibilities and sufficient management controls and incorporate Davis-Bacon Act streamlining guidance and (2) Authority staff is trained in labor standards compliance. We further recommend that the Program Center Coordinator of HUD’s Hartford Office of Public Housing require the Authority to (1) revise its contract with the agency to ensure that it is more specific as to Authority and contractor responsibilities for labor standards administration and enforcement and (2) report cases in which willful intent is apparent and/or in which restitution for a single employer was $1,000 or more, including those reviewed, and make any needed corrections to its semiannual enforcement reports.

Issue Date: June 7, 2011
Audit Report No.: 2011-AT-1009

Title: The Georgia Department of Community Affairs, Atlanta, GA, Paid for Some Unsupported Program Participants

HUD OIG performed an audit of the Homelessness Prevention and Rapid Re-Housing Program at the Georgia Department of Community Affairs. The audit was part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) national mandate to oversee and audit grant activities funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected the Georgia Department of Community Affairs because it received $19.1 million, which was the largest single Program grant awarded within Georgia under the Recovery Act. In addition, the HUD Atlanta Office of Community Planning and Development had not conducted a monitoring review of the Georgia Department of Community Affairs. The objective of the audit was to determine whether the Georgia Department of Community Affairs established policies and procedures to ensure that (1) Program participants were eligible, (2) Program expenditures were supported with adequate documentation, (3) Program reporting requirements were met, and (4) subgrantees were monitored and trained.

The Georgia Department of Community Affairs paid for Program services for participants whose eligibility was not supported with the required income verification documentation. As a result, 11 of 32 Program participants’ files reviewed did not include adequate income verification documentation. Consequently, the Program participants’ eligibility was not supported for $66,879 in Program services.

OIG recommended that the Director of HUD’s Atlanta Office of Community Planning and Development require the Georgia Department of Community Affairs to properly support or repay $66,879 or the current amount owed in questioned costs; ensure that the subgrantees follow Program requirements for verifying and documenting participant eligibility; and review a sample of the subgrantees files, not included in our review, to verify the participants’ eligibility.

Issue Date: June 7, 2011
Audit Report No.: 2011-FW-1011

Title: The San Antonio Housing Authority, San Antonio, TX, Generally Administered Its Recovery Act Public Housing Capital Funds Properly

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act), we audited the San Antonio Housing Authority’s (Authority) Public Housing Capital Fund Stimulus Recovery Act-funded activities. We wanted to determine whether (1) the Authority obligated, expended, and reported on its Recovery Act funds within regulatory requirements and (2) its procurements were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and Recovery Act requirements.

Generally, the Authority complied with the Recovery Act requirements regarding the obligation and expenditure of capital funds, and its procurements were made in accordance with Federal and Recovery Act requirements. The Authority also properly reported its accomplishments and grant status as required by the Recovery Act. The report does not contain recommendations as it contains no findings.

Issue Date: June 3, 2011
Audit Report No.: 2011-CH-1008

Title: The State of Michigan Lacked Adequate Controls Over Its Neighborhood Stabilization Program Regarding Awards, Obligations, Subgrantees’ Administrative Expenses and Procurement, and Reporting Accomplishments

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited the State of Michigan’s (State) Neighborhood Stabilization Program (Program) administered by the Michigan State Housing Development Authority (Authority). The audit was part of the activities in our fiscal year 2010 annual audit plan. We selected the State based upon our designation of the Program as high risk and a citizen’s complaint to our office. Our objectives were to determine whether the State (1) complied with Federal requirements in its award, obligation, and use of Program funds under the Housing and Economic Recovery Act of 2008 (Act); (2) ensured that a subgrantee complied with the U.S. Department of Housing and Urban Development’s (HUD) regulations when procuring architectural services for its Program-funded rehabilitation projects under the Act; and (3) complied with Federal requirements in its reporting of Program accomplishments under the Act and the American Recovery and Reinvestment Act of 2009 (Recovery Act).

The State did not comply with Federal requirements in its award, obligation, and use of Program funds under the Act, ensure that a subgrantee complied with HUD’s regulations when procuring architectural services for its Program-funded rehabilitation projects under the Act; and comply with Federal requirements in its reporting of Program accomplishments under the Act and Recovery Act. It (1) lacked sufficient documentation to support its award of Program funds under the Act for a project, (2) reported Program obligations under the Act in HUD’s Disaster Recovery Grant Reporting (Reporting) system that did not qualify as obligations, (3) inappropriately disbursed Program funds under the Act for Program obligations that did not qualify as obligations, (4) did not maintain sufficient documentation to support the use of Program funds under the Act for administrative expenses, (5) did not ensure that a subgrantee complied with HUD’s regulations when procuring architectural services for its Program-funded rehabilitation projects under the Act, (6) did not comply with Federal requirements by posting the State’s quarterly performance reports for the Program under the Act for the first through third quarters of 2010 on its official Web site more than 30 days after the end of each quarter, and (7) did not maintain sufficient documentation to support the number of jobs it reported as created or retained from the use of Program funds under the Recovery Act for the first and second quarters of 2010.

As a result, (1) HUD lacked assurance that the Authority awarded $1 million in Program funds under the Act for eligible project costs, (2) the Authority inappropriately reported Program obligations of more than $719,000 under the Act in HUD’s Reporting system and disbursed Program funds for more than $531,000 in Program obligations that did not qualify as obligations, (3) HUD lacked assurance that the Authority used nearly $87,000 in Program funds under the Act for eligible Program administrative costs, (4) HUD and the Authority lack assurance that nearly $68,000 in Program funds under the Act was used efficiently and effectively, (5) the public did not have timely access to the State’s quarterly performance reports for the Program under the Act, and (6) HUD and the public lacked assurance that the Authority accurately reported the number of jobs that the use of Program funds under the Recovery Act created or retained.

We recommend that the Director of HUD’s Detroit Office of Community Planning and Development require the State to (1) provide sufficient documentation to support that the fair market value of the properties was $1 million and that the Authority’s award of $1 million in Program funds under the Act for the purchase of the properties was reasonable or cancel the Authority’s award and award the $1 million in Program funds to an eligible project(s), (2) reimburse HUD from non-Federal funds for the more than $531,000 in Program funds under the Act inappropriately disbursed for Program obligations that did not qualify as obligations, (3) deobligate in HUD’s Reporting system the more than $719,000 in Program funds under the Act that did not qualify as Program obligations, (4) provide sufficient supporting documentation or reimburse its Program from non-Federal funds, as appropriate, for the nearly $87,000 in Program funds under the Act used for unsupported administrative costs, (5) perform a formal cost or price analysis to determine whether the nearly $68,000 in Program funds under the Act was reasonable for the architectural services provided for a subgrantee’s rehabilitation projects, (6) and implement adequate procedures and controls to address the findings cited in this audit report.

We also recommend that the Director of HUD’s Detroit Office of Community Planning and Development recapture the more than $188,000 in Program funds under the Act, which the Authority obligated that did not qualify as Program obligations but the Authority did not disburse, and reallocate the funds in accordance with 42 U.S.C. (United States Code) 5306(c)(4).

Issue Date: June 2, 2011
Audit Report No.: 2011-FW-1009

Title: The City of Houston, TX, Did Not Ensure That Its Homelessness Prevention and Rapid Re-Housing Program Complied With Recovery Act Requirements

In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act), we reviewed the City of Houston’s (City) Homelessness Prevention and Rapid Re-Housing Program (Homeless Program). Our objective was to determine whether the City ensured that its Homeless Program complied with Recovery Act and U. S. Department of Housing and Urban Development (HUD) laws, regulations, and requirements.

The City did not ensure that its Homeless Program complied with Recovery Act requirements. Specifically, it did not ensure that subrecipients properly documented eligibility for 13 of the 16 client files reviewed. This condition occurred because the City did not provide appropriate guidance to the subrecipients or properly monitor their performance. As a result, it paid $59,274 in Homeless Program assistance for tenants whose eligibility was not adequately documented and inappropriately paid $300 directly to one tenant.

We recommend that the Director of Community Planning and Development, Houston, TX, require the City to (1) conduct quarterly onsite monitoring of its subrecipient agencies to ensure that they comply with Homeless Program rules and requirements and ensure that the agencies maintain adequate records of client eligibility, (2) provide supporting documentation for 13 participants lacking adequate documentation or reimburse its Homeless Program account $59,274 from non-Federal funds, and (3) reimburse its Homeless Program account $300 from non-federal funds for ineligible expenses.

Issue Date: May 20, 2011
Audit Report No.: 2011-FO-0005

Title: HUD Can Improve Its Oversight of ARRA Obligation and Expenditure Requirements

We audited the U.S. Department of Housing and Urban Development’s (HUD) compliance with obligation deadlines and progress toward meeting expenditure requirements related to eight programs funded by the American Recovery and Reinvestment Act of 2009 (ARRA). The objectives of our review were to determine whether HUD obligated ARRA funds in accordance with applicable deadlines and to assess HUD’s oversight of grantees’ expenditure of ARRA funds and HUD’s internal requirements.

Our review determined that $1.6 million in Public Housing Capital Fund and Native American Housing Block Grant funds, recaptured after July 21, 2010, must be returned to the U.S. Treasury under the provisions of the Pay it Back Act. Additionally, we found that ARRA monitoring and oversight could be better documented in HUD’s funds control plans.

We recommend that the Office of the Chief Financial Officer ensure that the $1.6 million in recaptured funds is returned to the U.S. Treasury as required by the Pay it Back Act. We also recommend that the Office of the Chief Financial Officer establish and implement procedures to ensure the accuracy and completeness of ARRA funds control plans.

Issue Date: May 17, 2011
Audit Report No.: 2011-LA-1010

Title: People Assisting the Homeless, Los Angeles, CA, Did Not Always Ensure That Homelessness Prevention and Rapid Re-Housing Funds Were Used To Assist Eligible and Supported Participants

We audited the Homelessness Prevention and Rapid Re-Housing Program (HPRP) of People Assisting the Homeless (PATH) and three of its subgrantees based on the results of a separate audit of the City of Los Angeles Housing Department (Department). HPRP is part of the American Recovery and Reinvestment Act of 2009 (Recovery Act), and auditing the Recovery Act program is part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) audit priorities. Our overall audit objective was to determine whether PATH administered its HPRP in accordance with the Recovery Act and other requirements. PATH did not always administer its HPRP in accordance with the Recovery Act and other requirements. We reviewed 30 participant files and determined that PATH and its subgrantees approved HPRP assistance for 4 ineligible participants and 13 participants whose eligibility was not supported. In addition, 18 of the 30 participant files had other miscellaneous deficiencies such as missing staff affidavit forms and missing participant household identification documents. As a result, we questioned the use of $29,214 in HPRP assistance provided to these participants.

We recommend that the Director of the Los Angeles Office of Community Planning and Development require PATH to (1) reimburse its HPRP $8,210 from non-Federal funds for 4 ineligible participants; (2) provide supporting documentation for 13 participants lacking adequate documentation or reimburse its HPRP $21,004 from non-Federal funds; (3) establish and implement sufficient HPRP eligibility and documentation policies and procedures for income determination, homelessness, financial resources, support networks, participant recertification, and subsequent housing options; (4) develop and implement procedures to ensure that its subgrantees verify and document participant eligibility in accordance with HPRP requirements; (5) ensure that staff affidavit forms are maintained in each participant file for each person determining eligibility and are signed by a supervisor; and (6) ensure that it follows its own internal policies when determining HPRP eligibility.

Issue Date: May 17, 2011
Audit Report No.: 2011-PH-1010

Title: The Philadelphia Housing Authority, Philadelphia, PA, Failed To Support Payments and Improperly Used Funds From the American Recovery and Reinvestment Act of 2009

We audited the Philadelphia Housing Authority’s (Authority) use of its Public Housing Capital Fund formula grant that it received under the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected the Authority for audit based on a citizen’s complaint alleging misuse of these funds and because it received $126.5 million in Recovery Act capital funds. We focused strictly on $31.5 million of the funds that the Authority designated for the rehabilitation of 340 of its portfolio of approximately 7,300 scattered-site units. The audit objective was to determine whether the Authority’s payments to rehabilitate its scattered-site housing under the Recovery Act were supported and complied with HUD regulations and other applicable requirements.

The Authority’s payments to rehabilitate its scattered-site housing under the Recovery Act were not supported and did not comply with other applicable requirements. Specifically, the Authority could not support payments of almost $1 million in Recovery Act funds to rehabilitate 10 scattered-site units, virtually the entire amount we reviewed, raising questions about the propriety of an additional $26.4 million it spent during our audit period to rehabilitate the units we did not review. Also, the Authority’s tenants were subjected to health- and safety-related hazards, and the Authority failed to use its Recovery Act funds properly when it failed to ensure that the units it rehabilitated complied with local codes and other contract requirements. The Authority also made unsupported, unreasonable, and unnecessary payments to outside attorneys in an effort to obstruct the progress of the audit.

We recommend that HUD require the Authority to provide adequate documentation to support almost $1 million in unsupported costs identified by the audit or reimburse the applicable programs from non-Federal funds for any costs that it cannot support. We also recommend that HUD require the Authority to provide documentation to support the remaining $26.4 million in payments to rehabilitate its scattered sites using Recovery Act funds, if the Authority cannot support the $1 million. Alternatively, it should reimburse the applicable programs from non-Federal funds for any costs that it cannot support. Additionally, we recommend that HUD require the Authority to implement adequate procedures and controls to ensure that its payments for scattered-site rehabilitation comply with relevant laws and regulations and develop and implement controls to ensure that invoices for scattered-site rehabilitation are adequately verified and payments are made in accordance with the terms of the related contracts. We further recommend that HUD direct the Authority to implement appropriate measures to ensure compliance with applicable laws, ordinances, codes, rules, and regulations. Lastly, we recommend that HUD require the Authority to task its Office of Inspector General (OIG) to periodically audit a sample of current and future payments for scattered-site rehabilitation to ensure that responsible personnel enforce contract requirements and payments are adequately supported, necessary, and reasonable.

Issue Date: May 13, 2011
Audit Report No.: 2011-BO-0001

Title: Office of Public Housing, Boston, MA, Monitored Recovery Act Grants Awarded to Region 1 Public Housing Authority Grantees in Accordance With Applicable Requirements

We audited the monitoring conducted by the Office of Public Housing (PIH), in Region 1 of their Recovery Act Capital Fund Grantees, for compliance with the Recovery Act and applicable U.S. Department of Housing and Urban Development (HUD) regulations, policies and procedures.

Our objective was to determine whether PIH in Region 1 (1) monitored Recovery Act grantees identified by the risk assessment process HUD established and implemented for selecting Recovery Act grantees for monitoring, (2) monitored grantees’ administration of the grant for compliance with Recovery Act requirements, and 3) provided increased transparency and adequate monitoring of expenditures.

PIH in Region 1 monitored its Recovery Act Capital Fund grants according to Recovery Act requirements and applicable HUD regulations, policies and procedures. The report did not contain any findings.

Issue Date: May 5, 2011
Audit Memorandum No.: 2011-LA-1802

Title: The Housing Authority of the City of Los Angeles, Los Angeles, CA, Charged Its Recovery Act Program Without Applying Cost Reductions or Credits Related to Insurance Reimbursements

We reviewed the hazard-damaged units that the Housing Authority of the City of Los Angeles (Authority) is rehabilitating using formula grant American Recovery and Reinvestment Act of 2009 (Recovery Act) Public Housing Capital Fund program (program) funds. We selected the Authority based upon the results of our capacity review of the Authority’s Recovery Act program (see Office of Inspector General (OIG) audit report #2011-LA-1002, issued November 4, 2010) and concerns regarding the possibility of the Authority using Recovery Act program funds for the rehabilitation of hazard-damaged units while simultaneously obtaining insurance reimbursements related to those units from its commercial property insurance carrier. Our objective was to determine whether the Authority’s use of Recovery Act program funds on hazard-damaged units subject to property insurance reimbursements was in accordance with U.S. Department of Housing and Urban Development (HUD) requirements. We found the Authority improperly charged its Recovery Act program $75,370 and an additional pending amount of $8,018 without applying cost reductions or credits related to insurance reimbursements to its program.

We recommend that the Director of HUD’s Office of Public Housing instruct the Authority to: (1) Reimburse the Recovery Act program $75,370 for the insurance reimbursements posted to other accounts; (2) Confirm that the additional pending amount of $8,018 in insurance reimbursements is appropriately posted to the Recovery Act program; (3) Revise its policies and procedures to ensure that cost reductions are applied before disbursing Recovery Act funds and that credits are applied once reimbursements are received by the Authority. This measure will assure HUD that capital funds, including those provided under the Recovery Act, will be disbursed in accordance with applicable laws and regulations. In addition, we recommend that HUD’s Associate General Counsel for Program Enforcement determine legal sufficiency and if legally sufficient, pursue remedies under the Program Fraud Civil Remedies Act against the Authority and/or its appropriate personnel for improperly charging its Recovery Act program.

Issue Date: April 28, 2011
Audit Report No.: 2011-SE-1005

Title: Oregon Housing and Community Services Did Not Always Disburse Its Tax Credit Assistance Program Funds in Accordance With Recovery Act Requirements

The U. S. Department of Housing and Urban Development, Office of Inspector General, audited Oregon Housing and Community Services (Oregon Housing) to determine whether Oregon Housing established eligible grant projects, reported tax credit assistance program (TCAP) information into FederalReporting.gov correctly, and paid eligible TCAP expenditures in accordance with American Recovery and Reinvestment Act of 2009 (Recovery Act) requirements. Oregon Housing 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, it disbursed TCAP funds to two project owners for unsupported legal fees, and ineligible appraisal fees, market study, project compliance, and legal fees. We recommended HUD require Oregon Housing to provide supporting documentation for the unsupported costs, or reimburse its U.S. Treasury line of credit from non-Federal funds for any costs that remain unsupported with the ineligible costs. As a result of our audit, on March 17, 2011, Oregon Housing reimbursed $80,098 in unsupported costs, and $20,334 in ineligible expenditures to its U.S. Treasury line of credit from non-Federal funds. We also recommended that HUD require Oregon Housing to review the remaining TCAP projects for ineligible costs.

Issue Date: April 22, 2011
Audit Report No.: 2011-AT-1008

Title: Palm Beach County, FL, Did Not Fully Comply With Federal Requirements When Administering Its Neighborhood Stabilization Programs

The U.S. Department of Housing and Urban Development (HUD) OIG audited the Neighborhood Stabilization Programs (NSP) administered by Palm Beach County (County). Our objective was to determine whether the County administration of its NSPs complied with federal requirements. Specifically, we determined whether (1) NSP1 activities met or will meet the low- and moderate-income national objective, (2) program income was properly accounted for, and (3) expended program funds were allowable. In addition, we determined whether expended NSP2 administrative costs were allowable.

The County did not fully comply with Federal regulations when administering its NSP1 activities. Specifically, it did not (1) obtain HUD’s approval to waive the conflict-of-interest provision, (2) purchase properties at the required purchase discount, and (3) ensure that NSP1 funds expended did not exceed the amounts authorized. In addition, the County did not execute an agreement between its housing department and the facilities department administering the redevelopment activity. The deficiencies resulted in ineligible costs of $1.75 million to the NSP1 program.

In addition, the County did not report accurate program income to HUD. Thus, HUD could not be assured that the County would use an appropriate amount of its program income before drawing down NSP1 funds. As a result, the County had program income of $211,952 that could be put to better use.

The County also did not maintain documentation to sufficiently support the administrative expenditures recorded in its financial system. By not having effective controls, the County could not assure HUD that reviewed administrative expenditures were justified and that accurate program financial results were disclosed. As a result, the County drew down $10,000 in unsupported NSP2 funds.

OIG recommended that the Director of the Miami Office of Community Planning and Development require the County to (1) reimburse the NSP1 program $1.75 million from non-Federal funds for ineligible expenditures made from the program, (2) use the $211,952 in program income earned before drawing down additional NSP1 funds, (3) provide supporting documentation or repay the NSP2 program from non-Federal funds for the $10,000 drawn down to reimburse the unsupported workers compensation, and (4) implement policies and procedures to prevent future occurrences of the conditions identified.

Issue Date: April 8, 2011
Audit Report No.: 2011-AO-1004

Title: The New Orleans Redevelopment Authority, LA, Had Not Administered Its Recovery Act Neighborhood Stabilization Program 2 in Accordance With Federal Regulations

We audited the New Orleans Redevelopment Authority (Authority), a $29.7 million U.S. Housing and Urban Development (HUD) Neighborhood Stabilization Program 2 (NSP 2) grantee. We initiated the audit as part of the HUD Office of Inspector General’s (OIG) annual audit plan to review programs funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act). Our objective was to determine whether the Authority’s use of the NSP 2 funding, including the propriety of its ongoing activities, obligations, reports to HUD, and expenditures, was in accordance with Federal regulations.

The Authority did not always use its NSP 2 funds in accordance with Federal regulations. This condition occurred because the Authority (1) did not have adequate controls and/or policies and procedures, (2) did not follow its own policies and procedures, and (3) was not always aware of its responsibilities as a HUD grantee under NSP 2. As a result, the Authority could not provide reasonable assurance that it had adequately fulfilled the requirements of its agreement with HUD and the Authority and one of its consortium members improperly procured eight contracts. In addition, the Authority expended $178,148 in questioned costs. Further, at least $8,101,539 of the remaining funds is at risk of being misspent and, therefore, not serving NSP 2’s purpose, to stabilize neighborhoods, the viability of which has been and continues to be damaged by the economic effects of properties that have been foreclosed upon and abandoned.

We recommend that HUD’s Director of Community Planning and Development require the Authority to (1) establish policies and procedures regarding environmental reviews; (2) establish an internal audit function; (3) revise its appraisal, monitoring, procurement, and finance policies; (4) terminate its existing contract and ongoing services for its commercial appraisal services; (5) implement internal controls to adequately track NSP 2 costs; (6) revise and submit its cost allocation plan to HUD for review and approval; (7) establish and implement policies and procedures regarding NSP 2 reporting; (8) support or repay $178,148 in questioned costs, and (9) support the cost reasonableness for eight NSP 2-funded contracts.

We also recommend that HUD’s Director of Community Planning and Development (1) provide the Authority with training related to NSP 2 and other requirements, (2) closely monitor the Authority’s expenditure and procurement activities for the duration of the Authority’s NSP 2 grant or until HUD is satisfied that the NSP 2 expenditures and procurements meet Federal requirements, and (3) review the Authority’s listing of potential NSP 2-assisted properties to ensure eligibility and the accuracy of information. In addition, we recommend that HUD ensure that the Authority corrects all of the deficiencies noted throughout the report, conduct a risk analysis of the Authority, and provide the Authority with ongoing monitoring and technical assistance throughout the duration of the grant, thereby ensuring that at least $8,101,539 in program funds can be better used and used for eligible activities.

Issue Date: April 6, 2011
Audit Report No.: 2011-AT-1005

Title: The Nashville, TN, Metropolitan Development and Housing Agency Generally Complied With Neighborhood Stabilization Program 2 Requirements

We reviewed the Metropolitan Development and Housing Agency’s (Agency) Neighborhood Stabilization Program 2 (NSP2). We selected the Agency for review because it received, in a consortium established with The Housing Fund, Urban Housing Solutions, and Woodbine Community Organization, a nearly $30.5 million NSP2 grant under the American Recovery and Reinvestment Act of 2009. The Agency was the only NSP2 grant recipient in Tennessee. Our objective was to evaluate the Agency’s use of NSP2 funding, including the propriety of its activities, obligations, expenditures, and reports to the U.S. Department of Housing and Urban Development (HUD).

The Agency generally administered its NSP2 funds in accordance with HUD’s requirements. It was executing its program in accordance with its approved application, its planned activities and expenditures were eligible and supported, and its reports to HUD were generally accurate and timely. Since the Agency generally complied with NSP2 requirements, we did not recommend corrective action.

Issue Date: April 6, 2011
Audit Report No.: 2011-LA-1009

Title: Special Services for Groups, Los Angeles, CA, Approved Homelessness Prevention and Rapid Re-Housing Program Assistance for Unsupported and Ineligible Participants

We audited the Homelessness Prevention and Rapid Re-Housing Program (HPRP) of Special Services for Groups (Special Services) based on the results of a separate audit of the City of Los Angeles Housing Department (Department). Special Services is a subrecipient of the Department’s HPRP. HPRP is part of the American Recovery and Reinvestment Act of 2009 (Recovery Act), and auditing Recovery Act programs is one of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) audit priorities. Our overall audit objective was to determine whether Special Services administered its HPRP in accordance with the Recovery Act and other requirements. Special Services did not always administer its HPRP in accordance with the Recovery Act and other requirements. We reviewed 30 participant files and determined that Special Services approved HPRP assistance for an ineligible participant and 25 participants whose eligibility was not supported. As a result, we questioned the use of $53,931 in HPRP assistance provided to these participants.

We recommend that the Director of the Los Angeles Office of Community Planning and Development require Special Services to (1) reimburse its HPRP $2,300 from non-Federal funds for an ineligible participant whose income exceeded HUD requirements; (2) provide supporting documentation for 25 participants lacking adequate documentation or reimburse its HPRP $51,631 from non-Federal funds; and (3) establish and implement sufficient HPRP eligibility and documentation policies and procedures for income determinations, homelessness, financial resources, support networks, participant recertification, and subsequent housing options.

Issue Date: April 6, 2011
Audit Report No.: 2011-FW-1007

Title: Albuquerque Housing Services, Albuquerque, NM, 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 Albuquerque Housing Services’ (Housing Services) Public Housing Capital Fund Stimulus (formula) Recovery Act-funded activities. Our audit objectives were to determine whether Housing Services (1) properly obligated and expended its Recovery Act formula grant in accordance with requirements, (2) followed the Recovery Act requirements when procuring contracts for goods or services, (3) maintained inventory controls over its fixed assets to ensure that Recovery Act funds were used efficiently, and (4) accurately reported its Recovery Act activities.

Housing Services mismanaged its Recovery Act formula grant. Specifically, it did not properly obligate its Recovery Act formula grant in accordance with requirements, did not ensure that proper approval was obtained for disbursements exceeding $25,000, did not properly procure contracts, and did not maintain inventory controls over its fixed assets. However, it did ensure that expenditures were properly supported, and it properly reported its Recovery Act activities. Housing Services mismanaged its grant because its management disregarded Federal and City of Albuquerque (City) requirements and lacked policies to ensure compliance. As a result, Housing Services entire grant of more than $1.8 million was ineligible and unsupported.

We recommend that the U. S. Department of Housing and Urban Development (HUD) rescind more than $1 million in ineligible costs and deposit those funds with the U.S. Treasury in accordance with the Recovery Act as amended. Further, HUD should require Housing Services to support or repay to the U.S. Treasury $711,294 in unsupported costs and adopt policies, procedures, and internal controls. Additionally, HUD should place Housing Services under direct review for procurements and provide technical assistance and monitoring.

Issue Date: April 1, 2011
Audit Report No.: 2011-KC-1003

Title: The Missouri Housing Development Commission Did Not Always Disburse Its Tax Credit Assistance Program Funds in Accordance With Recovery Act Requirements

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 objective was to determine whether the Commission expended Recovery Act grant funds in accordance with Recovery Act requirements and applicable U.S. Department of Housing and Urban Development (HUD) rules. We concluded that the Commission did not always disburse TCAP funds in accordance with Recovery Act requirements and applicable HUD rules. It disbursed more than $3.6 million in TCAP funds for ineligible and improperly documented expenditures. We recommend that HUD require the Commission to reimburse $137,062 to its U.S. Treasury line of credit from non-Federal funds for the ineligible expenditures. In addition, we recommend that the Commission provide supporting documentation showing the amount includable in the eligible basis for the over $3.4 million of unsupported costs and reimburse its U.S. Treasury line of credit from non-Federal funds for the amount it determined was ineligible or it could not support. Further, we recommend that the Director require that HUD verify the implementation of the Commission’s new review process for the approval of draw requests to ensure that only eligible TCAP expenditures are paid.

Issue Date: March 28, 2011
Audit Report No.: 2011-SE-1004

Title: Oregon Housing and Community Services Generally Complied With Neighborhood Stabilization Program 2 Requirements

The U. S. Department of Housing and Urban Development, Office of Inspector General audited the Oregon Housing and Community Services (OHCS) to determine whether it ensured that properties funded with its Recovery Act Neighborhood Stabilization Program 2 (NSP 2) grant were eligible, obtained adequate supporting documentation for NSP expenditures, procured goods and services properly, and ensured that program income was properly used. OHCS ensured that the NSP 2 properties were eligible, generally had adequate supporting documentation for its NSP 2 expenditures, and generally procured goods and services properly.

Issue Date: March 21, 2011
Audit Report No.: 2011-PH-1008

Title: The West Virginia Housing Development Fund, Charleston, WV, Generally Administered Its Tax Credit Assistance Program Funded Under the Recovery Act in Accordance With Applicable Requirements

We audited the West Virginia Housing Development Fund’s (Fund) Tax Credit Assistance Program (Program) funds awarded under the American Recovery and Reinvestment Act of 2009 (Recovery Act) due to a complaint from the Recovery and Transparency Board. We also audited the Fund’s Program because it was the only housing finance agency across the Nation that had not spent any of its Program funds. Our objective was to determine whether the Fund administered its program in accordance with the Recovery Act and applicable U.S. Department of Housing and Urban Development (HUD) requirements. The Fund generally administered its Program in accordance with Recovery Act and HUD requirements. However, the Fund did not report 38 full-time equivalents (FTE) created during the first three quarters of 2010. We recommend that HUD require that the Fund maintain the FTE data that were not reported until the Federal Government requests the information.

Issue Date: March 21, 2011
Audit Report No.: 2011-BO-1007

Title: The Community Builders Expected To Expend Funding Within the Deadline and Meet Its Goals for the Neighborhood Stabilization Program 2

We reviewed The Community Builders, a nonprofit development and asset management firm that received a $78.6 million grant from the U.S. Department of Housing and Urban Development (HUD). Through the American Recovery and Reinvestment Act of 2009, Congress established the Neighborhood Stabilization Program 2 to grant funds to States, local governments, nonprofits, and a consortium of nonprofit entities for the purpose of stabilizing communities that have suffered from property foreclosures and abandonment. The goals of this program are realized through the purchase and redevelopment of foreclosed-upon and abandoned homes and residential properties.

The objectives of our review were to determine whether (1) the grantee was on track to expend Neighborhood Stabilization Program 2 funds within the statutory deadline, (2) Neighborhood Stabilization Program 2 funds were used for eligible and appropriate expenditures, and (3) the grantee can meet its program goals. We selected The Community Builders due to the size of its grant, its status as a nonprofit in a program typically used by units of local government, and its operations in multiple States. The audit was initiated by the Office of Inspector General (OIG) as part of its annual audit plan activities.

The Community Builders (1) was on track to expend the funding within the statutory deadline; (2) used Neighborhood Stabilization Program 2 funds for eligible and appropriate expenditures; and (3) with continued diligence, can meet its program goals.

This report does not contain recommendations, and no further action is necessary with respect to our report.

Issue Date: March 11, 2011
Audit Report No.: 2011-NY-1007

Title: The Jersey City Housing Authority, Jersey City, NJ, Had Financial Control Weaknesses in Its Recovery Act Funded Public Housing Capital Fund Program

We audited the Jersey City Housing Authority’s (Authority) administration of its public housing capital fund program funded under the American Recovery and Reinvestment Act of 2009 (Recovery Act). This is the second audit report regarding the Authority’s capital fund programs. We selected the Authority because of the size of its capital fund programs and because of its U.S. Department of Housing and Urban Development (HUD) risk rating. Our audit objective was to determine whether the Authority obligated and expended its Recovery Act Public Housing Capital funds in accordance with HUD regulations.

Authority officials generally complied with HUD regulations; however, weaknesses existed in the Authority’s financial management system. Specifically, (1) it was difficult to trace the drawdowns to the source documentation, (2) Authority officials charged their Recovery Act Capital Fund program with more expenses than were incurred, and (3) costs were miscategorized. Consequently, (1) HUD was precluded from effectively and efficiently monitoring and evaluating the Authority’s administration of its Recovery Act Capital funds. These deficiencies were due to the lack of adequate fiscal controls and accounting procedures in place and because Authority officials believed that their accounting system was adequate and complied with HUD regulations.

We recommended that the Director of HUD’s New Jersey Office of Public Housing instruct Authority officials to (1) improve their financial controls and accounting procedures to ensure that drawdowns can be traced to source documentation as required by HUD regulations; (2) develop procedures to ensure that drawdowns are made only on a reimbursement basis so that the specific costs paid are identified for each drawdown; (3) reimburse more than $5,000 from non-Federal funds to the Recovery Act Capital Fund program; (4) reimburse more than $13,000 to the dwelling structure line item from the administrative costs line item and correct the financial records in HUD’s Line of Credit Control System to ensure that the proper categories were charged; and (5) develop procedures to improve the accounting system and internal controls to ensure that funds are drawn down and used as budgeted and financial reports are accurate, current, and complete.

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

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.

U.S. Department of Housing and Urban Development

HUD OIG Recovery Act Audit Reports