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Report Fraud, Waste and Abuse
October 27, 2020
  • Community Planning and Development
2021-LA-1001
2021-LA-1001.pdf

We audited the City of Compton’s Neighborhood Stabilization Programs (NSP) 1 and 3 due to a referral made by our Office of Investigation because of concerns related to ongoing issues at the City and complaints received about the City’s administration of U.S. Department of Housing and Urban Development (HUD) funds.  In addition, HUD’s Office of Community Planning and Development rated the City as high risk for administering program funds in fiscal year 2018.  Our audit objective was to determine whether the City administered NSP1 and NSP3 funds in compliance with its own procedures and HUD regulations.

The City did not (1) maintain procurement documents for acquisition and rehabilitation services and consultant services to show fair and open competition at a reasonable price, (2) always disburse program expenses in compliance with its own procedures and HUD regulations, and (3) submit the required reports to HUD on time and post HUD quarterly performance reports on its website.  These issues occurred because the City did not implement its procurement controls.  In addition, the City experienced high staff turnover, which did not allow it to administer these programs in compliance with HUD regulations.  As a result, the City did not give vendors the opportunity to bid in fair and open competition for the services needed in the targeted areas.  Also, the City disbursed a total of $272,206 in questioned program expenses.  In addition, the City’s late submission of required reports to HUD and lack of posting performance reports on its website prevented HUD, the general public, government entities, and other stakeholders from knowing the progress of its program-funded projects and activities.

We recommend that HUD require the City to (1) implement procurement controls to maintain complete procurement documents, (2) provide adequate documents to support $270,656 in program expenses, and (3) submit future required reports to HUD on time and post the missing and future HUD quarterly performance reports on its website.

Recommendations
Recommendation Status Date Issued Summary
2021-LA-1001-001-A Open October 27, 2020 Implement its procurement controls to ensure that it is able to locate and maintain the complete procurement documents for at least 3 years after the closeout of NSP1 and NSP3 in compliance with its own procedures and HUD regulations.
2021-LA-1001-002-A Open October 27, 2020 Provide the required documents to support $161,131 in NSP1 and $109,525 in NSP3 funds for expenses for acquisition, rehabilitation, and administration. If the City cannot provide the required documents, it should repay the U.S. Treasury from non-Federal funds.
2021-LA-1001-002-B Open October 27, 2020 Repay the U.S. Treasury from non-Federal funds for the $1,550 overpaid to acquire a foreclosed NSP3 property.
2021-LA-1001-002-C Open October 27, 2020 Obtain technical assistance from HUD to ensure that it is able to manage the programs and comply with program regulations before processing future expenses related to NSP1 and NSP3 projects and activities.
2021-LA-1001-003-A Open October 27, 2020 Follow its NSP procedures and HUD regulations to complete and submit its future NSP1 and NSP3 HUD quarterly performance reports and annual single audit reports within the required timeframes until the closeout of the respective programs or until HUD is assured that these reports are consistently submitted on time.
2021-LA-1001-003-B Open October 27, 2020 Follow its own procedures and HUD regulations to post the missing 21 NSP1 and 22 NSP3 HUD quarterly performance reports, as of June 30, 2019, on its official website; and, post the future NSP1 and NSP3 HUD quarterly performance reports on its website until the closeout of the respective programs or until HUD is assured that these reports are consistently posted on its website.
2021-LA-1001-003-C Open October 27, 2020 Obtain technical assistance from HUD to ensure that the City is able to submit its quarterly performance reports and annual single audit reports on time and post the performance reports on its website to comply with program regulations.