We audited Luzerne County, PA’s Community Development Block Grant Disaster Recovery grant provided through the Disaster Relief Appropriations Act of 2013. We selected the County for review because (1) it had obligated the most disaster funds of the three Pennsylvania grantees that received funds through the Act and (2) the U.S. Department of Housing and Urban Development (HUD) had disbursed approximately $2.1 million to the County as of August 2015. Our audit objective was to determine whether the County used its disaster funds in accordance with applicable HUD and Federal requirements.
The County did not always use its disaster funds in accordance with applicable HUD and Federal requirements. Specifically, it did not ensure that subrecipients followed procurement requirements, and it lacked documentation to support funds disbursed for a building rehabilitation project. These conditions occurred because the subrecipients were not familiar with the requirements and the County did not have sufficient controls to ensure that they followed all requirements and provided adequate supporting documentation before disbursing funds to them. As a result, HUD and the County did not have assurance that $227,413 disbursed for contracts related to street improvements and flood drainage facilities was spent for costs that were fair and reasonable and that $109,423 disbursed for a building rehabilitation project was used in accordance with HUD and Federal requirements.
We recommend that HUD direct the County to provide documentation to show that the $227,413 disbursed for three contracts was for costs that were fair and reasonable and provide documentation to support $109,423 disbursed for the building rehabilitation project or repay HUD from non-Federal funds for any amount that it cannot support. Further, HUD should require the County to provide training to its subrecipients on Federal procurement and cost principle requirements and improve its controls to ensure that it obtains adequate documentation to demonstrate compliance with Federal procurement and cost principle requirements before disbursing Block Grant disaster funds to subrecipients.