We audited the HOME Investment Partnerships program (HOME) administered by the Maine State Housing Authority, Augusta, Maine (Authority), as part of our annual audit plan. The Authority received more than $21 million in U.S. Department of Housing and Urban Development (HUD) funding for its federal HOME program from 2005 to 2007. Our audit objective was to determine whether the Authority administered its HOME program in compliance with HUD regulations. We focused on whether the Authority (1) had adequate internal controls over its management process, accounting, and data processing; (2) used HOME program funds for eligible activities and adequately supported expenditures; (3) had adequate monitoring practices; and (4) properly accounted for HOME program income.
The Authority generally administered its HOME program in accordance with HUD regulations. It had adequate internal controls over its accounting and data processing and properly accounted for HOME program income. However, we identified two areas in which the Authority needs to improve its management controls, including improving its monitoring practices and ensuring that HOME program funds are used for eligible activities. Specifically, the Authority failed to track the status of outstanding housing quality standards deficiencies it found during annual compliance reviews and ensure that corrective actions were taken in a timely manner. The Authority also failed to ensure that two homes met HUD health safety standards before disbursing HUD funds to assist homebuyers. These deficiencies occurred because the temporary transition of personnel assigned to perform monitoring duties and the heavy workload of the Authority's only inspector for the Home Repair and Maine American Dream Initiative (MADI) programs impeded efforts to address corrective action items in a timely manner. Also, the Authority was unaware that the two homes failed to meet HUD standards because it did not maintain inspection reports, relying on the community action agency's (CAA) certifications that homes met HUD standards. As a result, several homeowners were living in homes that were not decent, safe, and sanitary. Also, the Authority's disbursement of $13,686 to two homebuyers for homes that were not decent, safe, and sanitary was not the best use of funds.