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We audited the Commonwealth of Massachusetts’ (State) Small Cities Community Development Block Grant (CDBG) program because the State was the largest recipient of CDBG funds in New England.  HUD awarded the State more than $88 million in CDBG funding for program years 2015, 2016, and 2017.  In addition, we had not audited any of the State’s community planning and development programs in the last 10 years.  Our audit objective was to determine whether the State provided adequate oversight and monitoring to ensure that its grantees complied with applicable State and Federal laws and requirements regarding (1) procurement, (2) conflict of interest, (3) program delivery, and (4) indirect cost rates.

The State did not always ensure that its grantees complied with applicable State and Federal laws and requirements.  Specifically, grantees did not always (1) properly conduct and document environmental reviews, (2) obtain independent cost estimates, (3) properly charge program delivery costs, and (4) obtain the State’s approval for projects that exceeded program limits.

These deficiencies occurred because the State did not provide adequate oversight to ensure that its grantees complied with applicable State and Federal laws and requirements.  As a result, we identified more than $1.5 million in questioned costs charged to the program, and HUD did not have assurance that all costs were eligible and supported.

We recommend that the Director of HUD’s Massachusetts Office of Community Planning and Development require State officials to (1) repay $665,920 in ineligible program costs; (2) support or repay $896,387 in unsupported program costs; and (3) provide additional guidance to their grantees and strengthen controls over procurement, site-specific environmental reviews, and the definition of which expenses are considered program delivery costs.

Recommendation Status Date Issued Summary
2019-BO-1003-001-A Closed August 05, 2019 Repay from non-Federal funds the $665,920 in ineligible costs charged to the program
2019-BO-1003-001-B Closed August 05, 2019 Support that 14 projects, with $494,517 in construction costs, met the environmental review requirements and repay from non-Federal funds any amounts attributed to projects that cannot be certified.
2019-BO-1003-001-C Closed August 05, 2019 Provide additional guidance to their grantees and strengthen controls to ensure that tier two environmental reviews are performed and properly conducted and signed by the responsible entity before committing program funds.
2019-BO-1003-001-D Closed August 05, 2019 Support $401,870 for contracts that were awarded without an independent cost estimate or repay from non-Federal funds any amount that cannot be supported.
2019-BO-1003-001-E Closed August 05, 2019 Provide additional guidance to their grantees and strengthen controls over procurement to ensure that grantees follow applicable State and Federal procurement requirements, including obtaining independent cost estimates and ensuring full and open competition.
2019-BO-1003-001-F Closed August 05, 2019 Define which expenses should be considered program delivery costs and strengthen controls over program costs to ensure that costs are properly charged.