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We audited the City of Moreno Valley’s Community Development Block Grant (CDBG) program, based on a referral from the Office of the Inspector General’s Los Angeles Office of Investigation, identifying the concerns of the Los Angeles Office of Community Planning and Development that the City did not properly charge salaries to the CDBG code enforcement program.  The objective of our audit was to determine whether the City correctly administered its code enforcement program.
The City did not administer its code enforcement program in accordance with U.S. Department of Housing and Urban Development (HUD) requirements.  Specifically, it did not (1) have a sufficient definition of deterioration or a written strategy describing how the program would be used to arrest the decline in CDBG-eligible target areas or (2) maintain adequate support for the eligibility of code enforcement payroll costs.  This condition occurred because the City did not have adequate written procedures or controls to ensure that it met HUD requirements and City staff was not sufficiently knowledgeable of the program requirements.  As a result, the City could not support $797,222 in code enforcement salary expenditures.
We recommend that the Acting Director of HUD’s Los Angeles Office of Community Planning and Development require the City to (1) support charges made to the code enforcement program or repay the program $797,222 from non-Federal funds, (2) develop and implement written policies to define deteriorated areas and establish a written plan of how the program would be used to arrest the decline in CDBG-eligible target areas, (3) develop and implement written controls to allocate code enforcement officers’ costs among different CDBG activities and other funding sources and to properly record work hours for inspection activities, and (4) provide training on HUD requirements to code enforcement staff.