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We audited the Municipality of Arecibo’s HOME Investment Partnerships Program as part of our strategic plan based on the results of a recent audit of the Municipality’s Community Development Block Grant program.  The objectives of the audit were to determine whether dwelling units acquired under the home-ownership program complied with the HUD’s housing standards and affordability requirements, whether the Municipality disbursed HOME funds within HUD-established timeframes, and reported accurate and supported information in HUD’s Integrated Disbursement and Information System.

The Municipality did not ensure that home-buyer acquisition-only activities met housing standards and that the principal residency requirement was met for the duration of the period of affordability.  In addition, it failed to return more than $26,000 in unexpended drawdowns to HUD and did not support the eligibility of $30,000 in program charges.  As a result, HUD had no assurance that more than $1 million disbursed was used solely for eligible purposes and that HOME-funded activities met program objectives and fully provided the intended benefits. 

The Municipality failed to reprogram and put to better use more than $3,900 in unexpended obligations associated with an activity that was terminated, did not report more than $1,400 in program income, and in two activities it overstated the commitment amount by $919.  In addition, the Municipality reported other inaccurate information concerning HOME-funded activities.  As a result, HUD had no assurance that the Municipality met HOME program commitment and disbursement requirements.

We recommend that HUD require the Municipality to (1) support that it spent more than $1 million on eligible activities, (2) remit $26,094 in unexpended drawdowns, (3) reprogram and put to better use $4,825 in unexpended and overstated commitments, and (4) develop and implement an internal control plan to ensure that only supported and accurate information is reported to HUD.

Recommendation Status Date Issued Summary
2014-AT-1001-001-B Open December 03, 2013 Require the Municipality to submit all supporting documentation showing that 21 home-buyer activities met the principal residency requirement for the duration of the period of affordability or reimburse the HOME program from non-Federal funds the $307,537 disbursed.