We audited Union County, NJ’s HOME Investment Partnerships Program based on a risk analysis of the County’s program that considered the amount of funding, the risk score assigned by the U.S. Department of Housing and Urban Development (HUD), and our identification of potential issues. The objective of the audit was to determine whether County officials had established and implemented adequate controls to ensure that the County’s program was administered in compliance with HOME program requirements.
The County’s program was not always administered in compliance with program requirements. Specifically, the County’s HOME fund was not reimbursed for assistance spent on partially canceled and noncompliant activities, was used for ineligible and unsupported community housing development organizations (CHDO), and was maintained in a bank account while drawdowns were made from the line of credit. In addition, activities were not administered in compliance with program requirements, income was not always collected and reported in the Integrated Disbursement and Information System, HOME match was not accurately calculated, and units were either leased to tenants or sold to home buyers without documentation to support eligibility. As a result, $242,269 was spent on ineligible CHDOs; more than $4.7 million was unavailable for eligible activities and CHDOs; $923,733 was spent on unsupported costs, a CHDO, and two home buyers; and HUD’s and the County’s interest of $597,519 in assisted properties was not protected.
We recommend that HUD instruct County officials to reimburse more than $3.7 million for disbursements made for terminated and noncompliant activities, and an ineligible CHDO; impose deed restrictions on two properties assisted with $597,519; reallocate $573,689 to an eligible CHDO; provide documents to support the eligibility of a CHDO that received $227,903 in CHDO reserve funds, two home buyers who received $260,736 in HOME assistance, and unsupported costs of $435,094; reimburse $536,507 to the local bank account for the uncollected and unreported program income; and disburse $92,557 to pay eligible HOME costs before making additional drawdowns from the Line of Credit Control System.