The City of Birmingham, AL, Did Not Ensure That Adequate Policies and Procedures Were Implemented for Its Internal Audits and Procurement Process

Date Published: 
Friday, July 21, 2017
Publication/Report Type: 
Audit Reports
Report Number: 
2017-AT-1008
Program Area(s): 
Community Development Block Grant, Disaster
State: 
Alabama
Summary: 

We audited the City of Birmingham, AL’s Community Development Block Grant Disaster Recovery (CDBG-DR) grant.  We selected the City for review based on concerns by the U.S. Department of Housing and Urban Development’s (HUD) Birmingham Office of Community Planning and Development in regard to the City’s administration of its disaster recovery program.  Our audit objectives were to determine whether the City ensured that (1) administrative costs were properly allocated, (2) only eligible projects were selected and only eligible applicants participated in the program, (3) adequate policies and procedures were implemented for program management, (4) funds were spent only for activities that were eligible and supported, (5) it adequately monitored activity and performance, (6) there was no duplication of benefits, and (7) procurement of goods or services was conducted according to applicable requirements. 

The City generally administered its CDBG-DR funds in accordance with HUD requirements.  It ensured that administrative costs were allocated correctly, only eligible projects and applicants participated in the program, funds were spent only for eligible activities that were adequately monitored, there was no duplication of benefits, procurement of goods and services was conducted according to applicable requirements, and all applicable projects were completed under the national objective of being located in a low- and moderate-income area.  However, the City did not conduct internal audits of the CDBG-DR program and did not develop or update, finalize, and implement its policies and procedures for its internal audits and the transition from 24 CFR (Code of Federal Regulation) 85.36 to 2 CFR Part 200 for its procurement contracts. 

We recommend that the Director of the Birmingham Office of Community Planning and Development require the City to (1) develop and implement HUD-approved policies and procedures to ensure that the process for conducting an internal audit complies with HUD regulations; (2) immediately conduct an internal audit; and (3) update, finalize, and implement its procurement policies to comply with 2 CFR Part 200.

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