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.