We audited the Municipality of Bayamón’s HOME Investment Partnerships Program. We selected the Municipality for review as part of our strategic plan based on the large amount of HOME funds approved. The objectives of the audit were to determine whether the Municipality maintained its financial management system in compliance with U.S. Department of Housing and Urban Development (HUD) requirements and met HOME program objectives.
The Municipality’s financial management system did not properly identify the source and application of more than $3.5 million in HOME funds, did not support the eligibility of more than $288,000 in program charges, and failed to disburse more than $420,000 in HOME funds within HUD-established timeframes. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used in accordance with HUD requirements.
The Municipality disbursed $703,473 in HOME funds for two activities that showed signs of slow progress without assurance that the activities would generate the intended benefits. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME-funded activities met program objectives and fully provided the intended benefits.
The Municipality reported to HUD more than $901,000 in HOME commitments without executing a written agreement or identifying the property in accordance with HUD requirements. It also failed to reprogram and put to better use more than $48,000 in unexpended obligations associated with two activities that were terminated. In addition, it did not report and put to better use more than $62,000 in program income and recaptured funds. As a result, HUD had no assurance that the Municipality met HOME program objectives, commitments, and disbursement requirements.
We recommend HUD require the Municipality to provide all supporting documentation to demonstrate the eligibility and allocability of more than $4 million in HOME program funds. HUD should require the Municipality to reprogram or return to its line of credit and put to better use more than $1.3 million in unexpended obligated funds and HOME funds maintained in its local bank account.
We also recommend HUD require the Municipality to develop and implement an internal control plan to ensure that (1) its financial management system complies with HUD requirements, (2) its HOME-funded activities meet the program objectives, and (3) accurate information is reported to HUD.