We audited the City of Altoona, Pennsylvania’s (City), Community Development Block Grant (CDBG) program based on a citizen complaint. Our audit objective was to determine if the City properly paid a subrecipient for eligible CDBG activities. We found that the City paid a subrecipient $914,335 for CDBG activities that it could not demonstrate were eligible. The City could not demonstrate that it paid a subreicipient for eligible activities that met a national objective under its Blighted Property Maintenance Program.

We recommend that the Director of the Pittsburgh Office of Community and Planning Development require the City to provide documentation to demonstrate that $914,335 was used for eligible activities that met a national objective or repay HUD from nonfederal funds. We further recommend that the Director require the City to establish and implement written policies and procedures requiring it to maintain records that (1) provide a full description of each activity undertaken; (2) demonstrate that each activity undertaken meets a national objective of the CDBG program; (3) determine the eligibility of the activities; and (4) document the acquisition, improvement, use, or disposition of real property acquired or improved with CDBG assistance. Lastly, the City should evaluate its subrecipient in terms of compliance risk, performance, and funding levels at least on an annual basis.