HUD OIG audited the Community Development Block Grant program (program) administered by the City of Deerfield Beach, FL (City). The objective of the audit was to determine whether the City administered its program in accordance with applicable U.S. Department of Housing and Urban Development (HUD requirements. We selected the City for review because it had come under increased scrutiny when various newspaper articles and reviews highlighted City problems. In addition, HUD’s 2010 risk assessment indicated that the City had demonstrated a record of poor performance with the program.

The City did not administer its program in accordance with applicable HUD requirements. It did not request exception to HUD’s conflict-of-interest provision before the awarding of funds. This condition occurred because the City lacked effective management controls to ensure compliance with HUD’s conflict-of- interest regulation. As a result, HUD had no assurance that the City did not practice favoritism in the awarding of funds and may have placed HUD’s funds at risk.

The City did not maintain adequate supporting documentation to demonstrate that it properly allocated salaries to the program. This condition occurred because the City did not have effective controls in place to ensure that salary allocations were properly documented. Without supporting documentation to substantiate the allocation of actual services performed by personnel, there was no assurance that the salary expenditures were accurate and program related.

The City did not comply with HUD requirements in meeting the national objective for its housing activities. It did not maintain adequate supporting documentation to demonstrate that the individuals served were low- and moderate-income persons. This condition occurred because the City lacked effective management controls and disregarded HUD requirements. As a result, there was no assurance that expended program funds achieved the intended national objective.

OIG recommends that the Director of the Miami Office of Community Planning and Development require the City to (1) reimburse $224,742 in HUD funds from non-Federal funds for ineligible costs, (2) provide supporting documentation or reimburse its program $142,248 from non-Federal funds for unsupported salary expenditures, and (3) provide supporting documentation or reimburse its program $28,298 from non-Federal funds for an activity in which the national objective was unsupported.