We audited the Municipality of Bayamón’s HOME Investment Partnerships Program. We selected the Municipality for review as part of our strategic plan based on the large amount of HOME funds approved. The objectives of the audit were to determine whether the Municipality maintained its financial management system in compliance with U.S. Department of Housing and Urban Development (HUD) requirements and met HOME program objectives.
The Municipality’s financial management system did not properly identify the source and application of more than $3.5 million in HOME funds, did not support the eligibility of more than $288,000 in program charges, and failed to disburse more than $420,000 in HOME funds within HUD-established timeframes. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used in accordance with HUD requirements.
The Municipality disbursed $703,473 in HOME funds for two activities that showed signs of slow progress without assurance that the activities would generate the intended benefits. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME-funded activities met program objectives and fully provided the intended benefits.
The Municipality reported to HUD more than $901,000 in HOME commitments without executing a written agreement or identifying the property in accordance with HUD requirements. It also failed to reprogram and put to better use more than $48,000 in unexpended obligations associated with two activities that were terminated. In addition, it did not report and put to better use more than $62,000 in program income and recaptured funds. As a result, HUD had no assurance that the Municipality met HOME program objectives, commitments, and disbursement requirements.
We recommend HUD require the Municipality to provide all supporting documentation to demonstrate the eligibility and allocability of more than $4 million in HOME program funds. HUD should require the Municipality to reprogram or return to its line of credit and put to better use more than $1.3 million in unexpended obligated funds and HOME funds maintained in its local bank account.
We also recommend HUD require the Municipality to develop and implement an internal control plan to ensure that (1) its financial management system complies with HUD requirements, (2) its HOME-funded activities meet the program objectives, and (3) accurate information is reported to HUD.
Recommendations
Community Planning and Development
-
Status2012-AT-1009-001-AOpenClosed$3,213,572.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Require the Municipality to develop and implement a financial management system in accordance with HUD requirements and ensure that $3,213,572 in HOME funds drawn from HUD between July 1, 2009, and December 31, 2011, can be traced to a level which ensures that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes or reimburse the HOME program from non-Federal funds.(Footnote 2) Total disbursements of $3,523,723 were adjusted to consider $173,978 questioned in recommendation 1B, $86,567 questioned in recommendation 1D, and $49,606 questioned in recommendation 2B.
-
Status2012-AT-1009-001-COpenClosed$114,139.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Require the Municipality to submit supporting documentation showing the allocability and eligibility of $114,139 charged to the HOME program for project delivery costs or reimburse the program from non-Federal funds.
-
Status2012-AT-1009-002-BOpenClosed$537,773.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Determine the eligibility of the $537,773 disbursed for the Ciudad de Ensueño project and reevaluate the feasibility of the activity. (Footnote 9) Total disbursements of $538,973 were adjusted to consider $1,200 questioned in recommendation 1F. The Municipality must reimburse its HOME program from non-Federal funds if HUD determines the activity to have been terminated.