We audited the Municipality of Bayamon’s Emergency Shelter Grants and Emergency Solutions Grants programs. We selected this auditee based on congressional and hotline complaints alleging that the Municipality improperly used Emergency funds to transport people from Puerto Rico to mainland U.S. cities to receive rehabilitation treatment. Our main audit objectives were to determine whether allegations included in the complaints had merit and whether the Municipality’s Emergency programs were administered in compliance with the U.S. Department of Housing and Urban Development’s (HUD) requirements.
Although the Municipality assisted in the transportation of persons from Puerto Rico to mainland U.S. cities to receive treatment, HUD funds were not used to pay for the transportation costs of the participants. However, the Municipality improperly used Emergency funds to pay for travel costs of employees who went to mainland U.S. cities to follow up on clients. The Municipality’s financial management system did not properly identify the source and application of more than $1.14 million in Emergency funds and allowed the use of more than $189,000 for ineligible expenditures. In addition, it did not support the eligibility of more than $38,000 in program charges and reported inaccurate information in HUD’s information system. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used for requested and eligible purposes and in accordance with HUD requirements.
We recommend HUD require the Municipality to (1) complete the implementation of the new accounting system in accordance with HUD requirements, (2) submit all supporting documentation showing the eligibility and propriety of $982,851 in Emergency funds, and (3) reimburse its program $189,227 from non-Federal funds in ineligible expenditures.
Recommendations
Community Planning and Development
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Status2016-AT-1012-001-AOpenClosed
Complete the implementation of the new accounting system and ensure it tracks program funds to a level that supports compliance with HUD requirements.
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Status2016-AT-1012-001-BOpenClosed$944,687.00Questioned 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.
Provide support that $944,687 (Footnote 2: Emergency funds of more than $1.1 million drawn between July 1, 2011, and December 31, 2015, were adjusted to consider $158,800 questioned in recommendation 1C and $38,164 questioned in recommendation 1D.) in Emergency funds drawn from HUD is reconciled with the accounting records and that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes or reimburse the Emergency programs from non-Federal funds.
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Status2016-AT-1012-001-COpenClosed$189,227.00Questioned 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.
Reimburse $189,227 to the Emergency programs from non-Federal funds for ineligible charges made to the programs.
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Status2016-AT-1012-001-DOpenClosed$38,164.00Questioned 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.
Submit supporting documentation showing the eligibility, reasonableness, and allocability of $38,164 charged to the Emergency programs for unsupported drawdowns and equipment cost allocations or reimburse the programs from non-Federal funds.