We audited the City of Syracuse, NY, pertaining to its Economic Development Initiative (EDI)-Special Project grants. The audit objective was to determine whether City officials were administering EDI Special Project grants effectively, efficiently, and economically in accordance with applicable rules and regulations. Specifically, we wanted to determine whether City officials expended EDI funds for eligible activities that were fully supported and achieved the grant objective.

City officials did not always administer and monitor the City’s EDI-Special Project grants effectively, efficiently, and economically in accordance with applicable rules and regulations. Specifically, they did not ensure that (1) all grant and leveraged costs were adequately documented to support the grant agreement’s intended use, (2) contract and procurement standards were followed, and (3) funds disbursed to recipients were used to complete activities in a timely manner. These deficiencies were due to management’s not implementing effective controls including monitoring procurements, disbursements, and grant progress to ensure that the program was conducted in accordance with the applicable regulations. As a result, more than $2.5 million of the funds disbursed was considered unsupported, and another $198,400 in preaward grant costs was ineligible.

We recommend that the Director of the U.S. Department of Housing and Urban Development’s (HUD) Congressional Grants Division instruct City officials to (1) repay from non-Federal funds the $198,400 in ineligible preaward grant disbursements; (2) submit documentation to justify the unsupported costs of more than $2.5 million so that HUD can make an eligibility determination and repay any amounts determined to be ineligible; and (3) establish controls to ensure that costs are properly procured, eligible, and necessary before being charged to the grants and performance goals are accomplished.